Berry Global prices; high-grade supply thin; credit spreads tighten; Nasdaq, Schwab mixed

By Cristal Cody

Tupelo, Miss., Dec. 15 – The high-grade primary market saw one deal price over Tuesday’s session as supply thins headed into the year-end.

Berry Global, Inc. priced $750 million of first priority senior secured notes due Jan. 15, 2026 (Ba2/BBB-/BBB-) in a Rule 144A and Regulation S deal on the tight side of guidance.

Issuance has been light week to date with two bond deals priced so far.

Monday’s session saw Microchip Technology Inc. price $1.4 billion of senior secured notes due Feb. 15, 2024 (Baa3//BBB-) in a Rule 144A and Regulation S offering that was upsized from $1 billion.

Issuance this week was expected to be front-loaded with the Federal Reserve concluding its two-day monetary policy meeting on Wednesday.

Up to about $10 billion of issuance is expected for the rest of the month, syndicate sources said.

More than $41 billion of investment-grade bonds have priced month to date, already outpacing forecasts of about $25 billion to $35 billion of volume for December.

Credit spreads firm

Credit spreads firmed more than 2.2 basis points on the day.

The Markit CDX North American Investment Grade 35 index closed Tuesday at a spread of 52.64 bps.

Market tone was mostly positive over the day with stock indices all more than 1% higher as the Northeast braced for a winter snowstorm.

In the high-grade space, the Pimco Investment Grade Corporate Bond index gained 0.11% in trading to $116.61.

The iShares iBoxx Investment Grade Corporate Bond ETF closed up 0.20% at $137.45.

Upcoming schedule

In other activity, Sifma released its holiday recommendations for the financial markets in 2021 and 2022 on Tuesday. The new schedule deviates from standard practice based on the U.S. Bureau of Labor Statistics’ employment situation data release schedule, Sifma said.

The markets typically are closed for the Good Friday holiday and close at 2 p.m. ET in the prior session. In 2021, the markets are recommended to close at 12 p.m. ET, on Good Friday.

Secondary mixed

Looking at the secondary market, new issues are mixed, a source said.

Nasdaq, Inc.’s $1.9 billion of senior notes (Baa2/BBB) that priced in three tranches on Dec. 7 were mixed in trading on Tuesday.

The company’s $600 million of 0.445% notes due Dec. 21, 2022 have not been active this week and were last seen in the secondary market on Friday at 100.09.

The notes priced at par to yield a 30 bps over Treasuries spread.

Nasdaq’s $650 million tranche of 1.65% notes due Jan. 15, 2031 were seen Tuesday at 98.84 in thin trading.

The notes priced at 99.667 to yield 1.686% with a 75 bps over Treasuries spread.

Nasdaq’s $650 million tranche of 2.5% notes due Dec. 21, 2040 traded over the day mostly flat at 98.70.

The notes priced at par to yield a spread of 80 bps over Treasuries.

Charles Schwab Corp.’s $2 billion of senior notes (A2/A/A) that priced in two tranches on Dec. 8 also were mixed.

The company’s $1.25 billion tranche of 0.9% notes due March 11, 2026 improved to 100.46 from 100.36 on Monday.

The notes priced at 99.878 to yield 0.924%, or a spread of 53 bps over Treasuries.

Charles Schwab’s tranche of 1.65% notes due March 11, 2031 were flat on the day at 100.90.

The company sold $750 million of the long 10-year notes at 99.804 to yield 1.671%, or a Treasuries plus 75 bps spread.

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