Morning Commentary: High-grade supply resumes; Waste Management offers four tranches

By Cristal Cody

Tupelo, Miss., Nov. 5 – The investment-grade primary market stirred on Thursday following three consecutive sessions of zero deal volume as votes in the U.S. presidential election continue to be counted.

Waste Management, Inc. is marketing four tranches of fixed-rate senior notes (Baa1/A-/BBB+) on Thursday.

The deal includes notes due in 2025, 2028, 2031 and 2050.

The offering is the first corporate issue of the week, sources report.

Zero to about $10 billion of investment-grade corporate volume was expected by syndicate sources this week.

Market tone remained strong at the start of Thursday’s session ahead of the conclusion of the Federal Reserve’s two-day monetary policy meeting.

The Pimco Investment Grade Corporate Bond index, which closed Wednesday up 1.17%, rose 0.48% to $115.99 in early trading.

The iShares iBoxx Investment Grade Corporate Bond ETF headed up 0.41% to $136.67 over the morning after closing the previous session up 1.33%.

Equities continued to rally at the open with indices up more than 1.5%.

Lowe’s rallies

In the secondary market, $16.51 billion of high-grade bonds traded on Wednesday, down from $18.38 billion on Tuesday and $18.92 billion on Monday, according to Trace.

Lowe's Cos., Inc.’s notes (Baa1/BBB+) that priced in October were among the most active issues in the secondary market on Wednesday and continued to trade better than issuance early Thursday, a source said.

The company’s 1.7% notes due Oct. 15, 2030 were up modestly at the 101 area over the morning.

The notes priced in a $1.25 billion tranche on Oct. 7 at 99.617 to yield 1.742% and a spread of Treasuries plus 95 basis points.

The Mooresville, N.C.-based home improvement company’s 3% bonds due Oct. 15, 2050 were seen in the 107 area over the morning after trading at 105 on heavy activity on Wednesday.

Lowe’s sold $1.75 billion of the 30-year bonds in the October offering at 99.902 to yield 3.005%, or a Treasuries plus 140 bps spread.

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