Bank of America, Morgan Stanley, Blackstone/GSO sell notes; funds, ETF inflows increase

By Cristal Cody

Tupelo, Miss., Oct. 16 – Investment-grade issuers priced $10 billion of notes on Friday, pushing week-to-date corporate volume to about $15 billion.

Bank of America Corp. led the week’s supply with $8.5 billion of medium-term senior notes (A2/A-/A+) priced in five tranches on Friday.

Morgan Stanley (A2/BBB+/A) came by with $1 billion of five-year global medium-term fixed-to-floating-rate senior notes.

In addition, Blackstone/GSO Secured Lending Fund priced an upsized $500 million Rule 144A and Regulation S offering of long five-year senior notes (Baa3//BBB-) following fixed income investor calls earlier in the week.

The deals bring week-to-date corporate volume to about $15 billion, in line with the $15 billion to $20 billion of volume expected following the Columbus Day holiday.

Sovereign, supranational and agency issuers also priced $8 billion of notes over the week.

Supply has been light with earnings-related blackout periods keeping issuers at bay, along with weaker economic data, declining hopes of additional Covid-19 stimulus before the November presidential election and a resurgence in global infections, sources report.

Bank issuance was anticipated following the release of third-quarter earnings this week from Morgan Stanley, Bank of America, Goldman Sachs Group Inc., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc.

On Friday, Bank of New York Mellon Corp., Citizens Financial Group Inc., State Street Corp. and Kansas City Southern were among high-grade companies posting quarterly results.

Steady supply forecast

Looking ahead to next week, issuance is expected to remain light but steady with about $15 billion of high-grade supply anticipated, according to syndicate sources.

Market tone was mixed over the day.

The Markit CDX North American Investment Grade 35 index closed modestly tighter at a spread of 56.54 basis points.

The Pimco Investment Grade Corporate Bond index declined 0.18% to 115.26 on Friday.

The iShares iBoxx Investment Grade Corporate Bond ETF fell 0.17% to $135.34.

Elsewhere, inflows into U.S. high-grade bond funds and ETFs climbed to $8.65 billion for the past week ended Wednesday from $7.79 billion in the prior week, according to a BofA Securities, Inc. research note released on Friday.

The week-over-week improvement was led by ETF inflows increasing to $3.39 billion from $2.88 billion, fund inflows rising to $5.26 billion from $4.91 billion and excluding short-term inflows climbing to $6.15 billion from $4.58 billion.

Inflows were partially offset by a “still solid” $2.49 billion inflow to short-term that was down from $3.21 billion in the previous week, according to the report.

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