Morning Commentary: Investment-grade action slows after heavy supply; World Bank on tap

By Cristal Cody

Tupelo, Miss., Sept. 11 – The high-grade primary market slowed on Friday following about $72 billion of corporate and sovereign, supranational and agency deal volume over three back-to-back sessions, according to market sources.

Investment-grade corporate issuers have sold more than $62 billion of bonds week to date.

SSA supply totals $9.5 billion week to date.

About $50 billion to $60 billion of deal volume was expected following Monday’s Labor Day holiday.

At least one issuer is expected to tap the primary market over the day.

The International Bank for Reconstruction and Development, or World Bank, is marketing a dollar-denominated offering of five-year global sustainable development floating-rate notes (Aaa/AAA/AAA) with initial talk in the SOFR plus 32 basis points area.

Corporate deal volume has been led this week by Nissan Motor Co. Ltd.’s $8 billion four-part offering of senior notes (Baa3/BBB-) that priced on Thursday.

SSA primary action has been led by a $4 billion offering of five-year notes from European Investment Bank (Aaa/AAA/AAA) on Wednesday.

The secondary market has increased volume over the week with $18.63 billion of high-grade corporate bonds traded on Thursday from $17.94 billion on Wednesday and $13.98 billion on Tuesday, according to Trace.

New issues mostly are trading modestly better than issuance by about 1 bp to 5 bps this week, a source said.

The $4 billion of senior notes that Nestle Holdings Inc. (Aa3/AA-) priced in four tranches on Tuesday firmed about 1 bp to 4 bps.

The deal included a $1.15 billion tranche of 0.375% notes due Jan. 15, 2024 priced with a spread of Treasuries plus 28 bps, $750 million of 0.625% notes due Jan. 15, 2026 sold at a Treasuries plus 45 bps spread, $1.1 billion of 1% notes due Sept. 15, 2027 priced with a 55 bps over Treasuries spread and $1 billion of 1.25% 10-year notes placed at a Treasuries plus 65 bps spread.

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