Morning Commentary: Marriott offers notes; Brighthouse add-on on tap; financials firm

By Cristal Cody

Tupelo, Miss., May 28 – A couple of issuers expect to tap the high-grade primary market on Thursday, while a number of companies are holding fixed income investor calls for possible deals, according to market sources.

Marriott International Inc. is returning to the primary market with an offering of fixed-rate senior notes (Baa3/BBB-) after pricing $1.6 billion of five-year notes at par to yield 5.75% on April 14 in a deal that attracted high-yield demand.

Also, Brighthouse Financial Inc. is coming back to the primary to bring a $115 million add-on to its 5.625% notes due May 15, 2030 (Baa3/BBB+/BBB) that were first priced earlier in the month.

Brighthouse had sold $500 million of the notes on May 13 at 99.871 to yield 5.642%, or a spread of Treasuries plus 500 basis points.

More than $24 billion of high-grade bonds have priced week to date, near the $25 billion to $30 billion range of supply anticipated by market participants for the week.

Numerous high-grade companies are holding fixed income investor calls this week for potential issuance.

Ralph Lauren Corp., which last tapped the high-grade bond market with an offering of senior notes (A2/A-) in 2018, will hold investor calls on Thursday and Friday.

Yara International ASA (Baa2/BBB) held fixed income investor calls for a dollar-denominated offering of senior notes on Wednesday.

Other companies holding fixed income investor calls this week include Health Care Service Corp., Ferguson Finance plc and Element Fleet Management Corp.

Volume this week has been led by Wells Fargo & Co.’s $6 billion two-part offering of fixed-to-floating rate notes (A2/A-/A+) that priced on Tuesday.

In the secondary market, Wells Fargo’s notes traded about 2 bps to 4 bps tighter than issuance, a source said.

The company’s $3.25 billion tranche of 2.393% notes due June 2, 2028 were last seen 2 bps better at the 186 bps bid area.

The eight-year notes priced at par to yield a spread of Treasuries plus 187.5 bps, tighter than talk in the 215 bps over Treasuries area.

New financial paper has traded mostly better in the secondary market, a market source said.

Santander Holdings USA, Inc.’s $1 billion of 3.45% senior notes due June 2, 2025 (Baa3/BBB+/BBB+) that priced on Wednesday firmed more than 10 bps to 304 bps bid.

The notes priced at 99.804 to yield 3.493% and a spread of 315 bps over Treasuries versus initial talk in the Treasuries plus 350 bps area.

Overall high-grade secondary market volume was heavy on Wednesday with $31.93 billion of bonds traded, up from $27.7 billion on Tuesday at the start of the holiday-shortened week, according to Trace data.

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