Morning Commentary: Charles Schwab, Valero offer corporate bonds; New Brunswick on tap; RBS eases

By Cristal Cody

Tupelo, Miss., May 17 – A few investment-grade issuers marketed bonds at the start of Thursday’s session.

Charles Schwab Corp. is offering three tranches of senior notes, including one tranche of floaters.

Valero Energy Corp. plans to sell 10-year senior notes.

Also, as previously reported, the Province of New Brunswick is expected to bring a dollar-denominated 10-year issue to the primary market.

The notes were initially talked to price at a spread in the mid-swaps plus 50 basis points area.

A couple of Canadian issuers also announced preferred stock deals early Thursday.

Emera Inc., a Halifax, N.S.-based energy and services company, said it priced C$300 million of cumulative minimum rate reset first preferred shares with a 4.9% annual dividend for the initial fixed-rate period ending Aug. 15, 2023.

Intact Financial Corp., a property and casualty insurance company based in Toronto, announced it priced C$200 million of non-cumulative class A rate reset preferred shares with a 4.9% annual dividend for the initial fixed-rate period ending June 30, 2023.

Investment-grade supply slowed on Wednesday to $1.8 billion of reported volume following more than $25 billion of bond issuance in the first two sessions of the week.

Several issuers are gauging investor interest in new bond deals.

Vodafone Group plc, Eni SpA and ASB Bank Ltd. are holding roadshows this week.

About $30 billion to $35 billion of investment-grade bond volume is forecast by market sources for the week.

New issues mixed

In other activity, most of the new issues that have priced this week are trading tighter with a few wrapped around issuance and one modestly softer, a market source said.

Royal Bank of Scotland Group plc’s $1.75 billion of 4.892% fixed-to-floating rate senior notes due May 18, 2029 (Baa3/BBB-/BBB+) that priced on Tuesday at par to yield a spread of Treasuries plus 182 bps have eased about 3 bps in secondary trading.

Overall secondary trading volume climbed to $20.77 billion on Wednesday from $19.86 billion on Tuesday and $15.99 billion on Monday, according to Trace.

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