Pick-up in bond supply forecast; American Express mixed; Great Plains Energy tightens

By Cristal Cody

Tupelo, Miss., April 28 – A pick-up in high-grade deal volume is expected as May kicks off following just under $20 billion of bond issuance this week.

About $25 billion to $30 billion of U.S. bond volume is forecast in the week ahead, according to a market source.

The Canadian bond markets also were mostly quiet with attention on Home Capital Group Inc.’s notes due Dec. 10, 2018.

“They were down as low as 75 bucks and now they’re around 90 today,” a source said. “That’s a pretty good improvement for one day.”

DBRS downgraded the company’s notes to junk on Wednesday.

In secondary trading on Friday, American Express Credit Corp.’s new and existing notes (A2/A-/A) were mixed.

Great Plains Energy Inc.’s notes (Baa3/BBB/) priced in March headed out on Friday trading about 2 basis points to 5 bps tighter as the bonds continue to make slight gains. The notes were flat to about 5 bps wider than issuance.

In the previous week, Kansas regulators rejected the deal for a combined utility of Kansas City, Mo.-based Great Plains Energy and Topeka-based Westar Energy Inc. The deal also requires approval from Missouri and federal regulators.

The company’s bonds carry mandatory and special calls of 101 if the merger does not close or is delayed.

The Markit CDX North American Investment Grade index softened modestly to close on Friday at a spread of 64 bps.

American Express mixed

American Express Credit’s 1.875% notes due May 3, 2019 traded on Friday at 63 bps bid, 61 bps offered, according to a market source.

The company priced $1.5 billion of the two-year notes on Thursday at a spread of Treasuries plus 65 bps.

American Express Credit’s 3.3% notes due May 5, 2027 firmed to 108 bps bid, 106 bps offered in the secondary market.

American Express priced $2 billion of the notes on Thursday at Treasuries plus 115 bps.

American Express Credit’s existing 2.2% notes due March 3, 2020 widened 7 bps in secondary trading on Friday to 63 bps bid, a separate market source said.

The company sold $2 billion of the notes on Feb. 28 at a spread of Treasuries plus 72 bps.

American Express Credit’s 2.7% notes due March 3, 2022 tightened 3 bps to 72 bps bid.

The notes were sold in a $1.75 billion tranche in the Feb. 28 offering at a Treasuries plus 82 bps spread.

American Express Credit is a New York City-based credit card services provider.

Great Plains improves

Great Plains Energy’s 3.9% notes due April 1, 2027 tightened 5 bps on Friday to 145 bps bid in the secondary market, a source said.

The notes headed out higher on the day at 101.76 from 101.30 on Thursday.

Great Plains sold $1.4 billion of the notes on March 6 at 99.87 to yield 4.858% and a spread of Treasuries plus 145 bps.

The company’s 4.85% bonds due April 1, 2047 traded 2 bps better on the day at 180 bps bid.

The also climbed to 101.90 on the day, better than where the bonds last traded in the previous session at 101.68.

The company sold $1 billion of the 30-year bonds in the March offering at 99.87 to yield 4.858%, or a spread of Treasuries plus 175 bps.

Great Plains is the holding company of Kansas City Power & Light Co. and KCP&L Greater Missouri Operations Co.

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