High-grade bond issues print tight; Amazon leads week’s issuance; December supply eyed

By Cristal Cody

Tupelo, Miss., Dec. 2 – Investment-grade bond issuers came back from the Thanksgiving holiday ready to print, though appetite waned by Thursday.

Issuers tested the waters on Monday with $2.25 billion of corporate supply before the market was slammed Tuesday with more than $17 billion of investment-grade paper.

Amazon.com Inc. led the pack with an $8.25 billion five-part senior notes offering that came in about 20 basis points from initial talk, a source said.

Amazon.com’s seven-year issue (A1/AA) firmed the most among the tranches with a print of Treasuries plus 62.5 bps, in from talk at the 85 bps spread area.

But in the secondary market, Amazon.com’s notes mostly widened by more than 5 bps with only the 10-year tranche seen tighter in secondary trading on Friday, a source said.

The company’s $2.25 billion of 4.7% notes due 2032 firmed 1 bp from issuance to 94 bps bid.

Supply waned on Wednesday with just $2.55 billion of new issues, including $1 billion of two-year notes (A2/AA-) from Bank of Nova Scotia that came 20 bps tighter than talk at a spread of 90 bps over Treasuries.

Scotiabank dropped a two-year floating-rate tranche from the final offering, a source said.

The fixed-rate tranche firmed more than 5 bps in the secondary market. The 5.25% notes due 2024 traded tighter on Friday at 82 bps bid, 79 bps offered, a source said.

The week’s deals saw their spreads tighten from initial price talk to final pricing on average by 1.6 bps from the prior week’s average, according to a market source.

More than $21 billion of high-grade notes were sold over the week with issuance coming in line with forecasts of about $15 billion to $25 billion of volume.

November ended with stronger supply than expected on a bond total of about $102 billion that outpaced market forecasts of about $75 billion for the month.

Primary action is expected to thin headed into the year-end and considerably so following the Federal Reserve’s Dec. 13-14 monetary policy meeting.

Looking at the week ahead, about $10 billion to $15 billion of new high-grade deal supply is expected, sources said.

December is anticipated to post about $25 billion of new volume.

Issuance year to date totals about $1.2 trillion, down from $1.4 trillion a year earlier.

Outflows heavy

Meanwhile, high-grade corporate investment funds saw heavy outflows of $6.92 billion for the past week ended Wednesday, according to Refinitiv Lipper US Fund Flows.

Corporate investment-grade funds have posted net outflows of more than $125 billion year to date.

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