Morning Commentary: American Express, PepsiCo to tap primary market; financials tighten

By Cristal Cody

Tupelo, Miss., July 25 – Investment-grade supply is expected to continue on Thursday with several bond deals marketed over the morning.

American Express Co. is on deck with an offering of five-year fixed-rate notes.

PepsiCo, Inc. plans to price fixed-rate senior notes.

In addition, Las Vegas Sands Corp. is offering three tranches of registered senior notes (Baa3/BBB-/BBB-) in an expected $3.5 billion deal.

Week to date, high-grade issuers already have priced more than $20 billion of bonds, compared to forecasts of about $15 billion to $20 billion of volume for the entire week.

Bank and financial issuance has been busier following the release of earnings reports since last week.

On Wednesday, U.S. Bancorp, Bank of Nova Scotia and JPMorgan Chase & Co. priced new securities.

On Tuesday, new issuance included Bank of America Corp.’s $1.5 billion of two-year floating-rate senior notes, BB&T Corp.’s $1 billion of five-year senior medium-term notes and Bank of Montreal’s $500 million of fixed-rate resetting non-cumulative perpetual subordinated additional tier 1 capital notes.

Monday saw new deals from Synchrony Financial and Citizens Financial Group, Inc.

New bank and financial notes are trading mostly better than issuance in the secondary market, a source said.

U.S. Bancorp’s $2.25 billion of fixed-rate senior and subordinated notes that priced in two tranches on Wednesday tightened about 3 basis points to 7 bps in the secondary market.

The company’s $1 billion tranche of 3% subordinated notes (A1/A-/A+) due July 30, 2029 firmed 7 bps to the 88 bps area. The notes priced at a spread of Treasuries over 95 bps.

Bank of Nova Scotia’s $1.25 billion of 2.7% senior notes due Aug. 3, 2026 (A2/A-/AA-) improved about 2 bps in secondary trading, according to the market source.

The bail-inable notes (A2/A-/AA-) priced at a Treasuries plus 82 bps spread.

Synchrony Financial’s $750 million of 2.85% senior notes due July 25, 2022 are trading about 12 bps tighter than where the notes priced on Monday.

Synchrony Financial (BBB-/BBB-) sold the notes at a Treasuries plus 110 bps spread.

Secondary market volume this week has included $20.04 billion of high-grade bonds traded on Wednesday, $21.8 billion on Tuesday and $17.46 billion on Monday, according to Trace data.

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