Caterpillar reopens floaters; high-grade supply thins in front of holiday; bonds mixed

By Cristal Cody

Tupelo, Miss., Aug. 27 – Caterpillar Financial Services Corp. priced a $750 million reopening of its medium-term floating-rate notes due March 15, 2021 on Monday as the sole reported issuer in the high-grade corporate and SSA bond markets.

Deal volume is expected to stay anemic until after the Labor Day holiday with only up to $5 billion of supply forecast by market sources for this week.

Volume slowed last week with nearly $10 billion of investment-grade corporate bonds brought to the primary market.

Trading desks also are thin with many out for the last week of summer holidays, sources said.

The bonds markets will be closed on Sept. 3 for the holiday.

The Markit CDX North American Investment Grade 30 index tightened more than 1 basis point on Monday to end at a spread of 59 bps.

In the secondary market, AstraZeneca plc’s 4% notes due Jan. 17, 2029 headed out up at 100.125 on Monday from 99.75 on Friday, a market source said.

The Cambridge, England, biopharmaceutical company sold $1 billion of the notes (A3/BBB+/A-) on Aug. 14 as part of a $3 billion four-part offering at 99.59 to yield 4.049%, or a Treasuries plus 115 bps spread.

Amazon.com, Inc.’s $3.5 billion of 3.15% notes due Aug. 22, 2027 (Baa1/AA-/) priced a year ago have been volatile in secondary trading over the past week and traded about 6 bps wider on Monday to 77 bps bid, a market source said.

The Seattle-based online commerce company sold $3.5 billion of the notes on Aug. 15, 2017 at a spread of Treasuries plus 90 bps.

Elsewhere, AT&T Inc.’s investment-grade bonds (Baa2/BBB/A-) were seen trading flat to about 6 bps tighter, while Verizon Communications Inc.’s bonds (Baa1/BBB+/A-) traded about 1 bp tighter to 7 bps wider, a source said.

Comcast Corp.’s bonds (A3/A-/A-) headed about 4 bps to 6 bps better over the day.

Caterpillar prices add-on

In the session’s sole reported offering, Caterpillar Financial Services priced a $750 million tap of its medium-term floating-rate notes due March 15, 2021 (A3/BBB+/A) at 99.966 to yield Libor plus 25 bps, according to an FWP filing with the Securities and Exchange Commission.

Caterpillar previously issued $450 million of the notes on March 15 at par to yield Libor plus 23 bps. The total outstanding is now $1.2 billion.

TD Securities (USA) LLC was the bookrunner.

Nashville-based Caterpillar Financial Services is a financing arm of Caterpillar Inc.

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