Front-loaded IG deal supply builds; secondary digests heavy volume; Nordson firms

By Cristal Cody

Tupelo, Miss., Sept. 8 – Investment-grade issuers pounced over the post-Labor Day week and priced about $54 billion of new notes in three sessions.

Volume was expected to come in hot and heavy with forecasts of at least $40 billion of high-grade supply for the week.

Issuance likely will slow somewhat in the Sept. 11 week to a more normal volume in the $25 billion to $30 billion range, sources said Friday.

The primary market is expected to be strong out of the gate on Monday ahead of the release of the Consumer Price Index next week, sources said.

Issuers already have priced a significant chunk of September’s deal forecast.

About $125 billion of total high-grade volume was expected to hit the market this month.

Most of the week’s new issues found footing in the secondary market, sources said.

Investment-grade credit spreads have “held in because they should,” according to a KBRA note on Friday.

John Deere Capital Corp.’s $1.9 billion three-part offering of medium-term notes (A2/A/A+) on Tuesday traded about 1 basis point to 4 bps better in the aftermarket before pulling back slightly by the week’s end.

The notes traded flat to 3 bps tighter going into the weekend, a source said.

The $1 billion tranche of 5.15% notes due 2033, priced tighter than initial talk in the 115 bps area at a spread of 90 bps over Treasuries, firmed to 87 bps bid.

Volkswagen Group of America Finance LLC’s $3.4 billion five-part offering of notes (A3/BBB+) brought Tuesday were mixed and mostly softer by Friday, sources said.

The $500 million tranche of 5.9% notes due 2033 was quoted at 170 bps bid, 165 bps offered. The notes priced at a Treasuries plus 165 bps spread. Initial talk was at the Treasuries plus 185 bps area.

Toyota Motor Credit Corp.’s $1.75 billion three-part sale of notes (A1/A+) firmed about 1 bp after pricing Wednesday, a source said.

By Friday, the notes were trading flat to about 5 bps tighter, a source said.

The $750 million tranche of 5.25% notes due 2028 was quoted at 80 bps bid. The notes priced at a spread of 85 bps over Treasuries, tighter than talk at the 95 bps area.

Nordson Corp.’s $850 million of notes (Baa2/BBB) sold Thursday in two tranches popped in the secondary market with the issues trading more than 5 bps tighter, a source said.

The $500 million tranche of 5.8% notes due 2033 firmed to 148 bps bid. The notes priced at Treasuries plus 157 bps. Talk was at the 185 bps over Treasuries area.

Corporate outflows climb

Corporate high-grade fund outflows soared to $2.1 billion in the past week ended Wednesday, Refinitiv Lipper US Fund Flows reported.

Net outflows climbed from $971 million in the prior week and $984 million a week earlier.

Looking at high-grade bond funds and ETFs, flows improved with a $1.01 billion inflow over the week ended Wednesday after a $730 million outflow in the previous week, according to a BofA Securities research note.

The increase came from high-grade funds, which racked up $2.1 billion of inflows this week after a $1.35 billion outflow last week.

“This was the biggest inflow to HG funds in nine weeks,” BofA said.

Meanwhile, high-grade ETFs had outflows of $1.09 billion over the past week following a $620 million inflow a week ago, according to the report.

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