Morning Commentary: Investment-grade supply quiets; Intel notes mixed; Westpac softens

By Cristal Cody

Tupelo, Miss., Nov. 22 – The investment-grade bond market opened with quiet activity on Friday with no reported issuers expected to tap the primary market.

High-grade supply totals more than $19 billion week to date.

Including a $7 billion three-part offering of split-rated notes (Ba1/BBB-/BB+) from Centene Corp. on Thursday in an offering that was completed off the high-yield desks, deal volume totals more than $26 billion for the week.

In other activity, the secondary market posted its strongest trading volume of the week on Thursday.

Investment-grade corporate secondary market volume rose to $21.02 billion in the previous session, compared to $19.67 billion on Wednesday, $20.59 billion on Tuesday and $18.25 billion on Monday, according to Trace data.

Looking at new issue secondary trading early Friday, Intel Corp.’s senior notes (A1/A+/A+) were mixed in active trading over the morning, a source said.

The company’s 2.45% notes due Nov. 15, 2029 softened to 100.19 from 100.29 on Thursday.

Intel sold $1.25 billion of the 10-year notes on Monday at 99.868 to yield 2.465%, or a spread of 65 basis points over Treasuries.

The company’s 3.25% notes due Nov. 15, 2049 traded up nearly 1 point over the morning after weakening on Thursday.

The 30-year notes were quoted at 101.35 in early trading after heading out in the previous session at 100.49.

Intel sold $1.5 billion of the bonds on Monday at 99.943 to yield 3.253%, or Treasuries plus 95 bps.

In other secondary trading, Westpac Banking Corp.’s notes remain mostly weaker following reports the company is facing charges of failing to deter money laundering involving child exploitation in Asian countries, a source said.

In a statement on Friday, Westpac Banking said its board “unreservedly apologizes” and remains committed to resolving the issues.

The Sydney, Australia-based bank has tapped the dollar-denominated market four times in 2019, most recently on Nov. 12.

Westpac Banking’s $1.25 billion of 2.35% senior notes (Aa3/AA-) due Feb. 19, 2025 have slid lower since Monday. The notes dropped from 100.80 on Wednesday to close Thursday at 100.08 and were trading weaker at 99.99 over the morning.

The notes priced in a registered offering on Nov. 12 at 99.972 to yield 2.356%, or 63 bps over Treasuries.

Westpac Banking’s 4.421% subordinated notes due July 24, 2039 (Baa1/BBB/A+) that priced on July 16 softened to 107.57 on Thursday from 108.28 on Wednesday. The notes were not active in early trading on Friday.

The bank priced $1 billion of the 2039 notes at par to yield a spread of Treasuries plus 180 bps.

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