High-grade supply forecast; new Apple notes firm; Kemper tightens; Whole Foods comes in

By Cristal Cody

Tupelo, Miss., June 16 – Investment-grade issuers stayed out of the primary market on Friday following a light volume week that missed expectations.

High-grade issuers priced about $14 billion of bonds over the first four sessions, compared to forecasts of about $20 billion to $25 billion of issuance.

Supply is expected to pick up in the week ahead with several issuers in the deal pipeline, a market source said. About $25 billion of issuance is expected over the week.

FirstEnergy Corp. (Baa3/BBB-/) is in the deal pipeline with a notes offering following a two-day round of investor calls on Thursday.

Also, Suntory Holdings Ltd. (Baa2/BBB/) is preparing to hold investors calls on Monday and meetings on Tuesday for a Rule 144A and Regulation S dollar-denominated offering of five-year senior notes.

New bonds priced over the week were mixed in the secondary market.

Fifth Third Bancorp’s $700 million offering of five-year senior notes were ending the week wrapped around issuance.

Apple Inc.’s $1 billion of 3% 10-year senior notes traded about 2 basis points better in the secondary market.

Intel Corp.’s $600 million offering of 2.7% seven-year senior notes traded flat.

New bonds from insurers traded mostly unchanged to better on Friday.

Kemper Corp.’s reopened 4.35% senior notes due Feb. 15, 2025 firmed more than 10 bps in the secondary market.

In other secondary trading, Whole Foods Market Inc.’s 5.2% notes due Dec. 3, 2025 (Baa3/BBB-/) tightened about 85 bps on Friday following the news Amazon.com, Inc. will purchase the natural and organic foods grocer for $13.7 billion in cash.

Whole Foods’ 5.2% notes due Dec. 3, 2025 headed out on Friday at 92 bps bid, a market source said. The notes traded on Thursday more than 20 bps better in the 177 bpd bid area.

Austin, Texas-based Whole Foods sold $1 billion of the notes on Nov. 30, 2015 at a Treasuries plus 300 bps spread.

The acquisition is expected to close in the second half of the year.

Elsewhere in the secondary market, telecommunications bonds were mixed on Friday.

Verizon Communications Inc.’s 4.125% notes due March 16, 2027 headed out flat on the day at 147 bps bid, according to a market source.

The New York City-based telecommunications company sold $3.25 billion of the notes (Baa1/BBB+/A-) on March 13 at a spread of Treasuries plus 160 bps.

AT&T Inc.’s 4.25% notes due March 1, 2027 softened 3 bps to 164 bps bid, according to a market source.

The Dallas-based telecommunications company sold $2 billion of the notes (Baa1/BBB+/A-) on Jan. 31 at a spread of Treasuries plus 180 bps.

The Markit CDX North American Investment Grade index eased more than 1 bp to close on Friday at a spread of 61 bps.

Fifth Third steady

Fifth Third Bancorp’s 2.6% senior notes due June 15, 2022 traded wrapped around issuance in the secondary market at 83 bps bid, 80 bps offered, a source said.

Fifth Third Bancorp sold $700 million of the five-year notes (Baa1/BBB+/A) on Monday at a spread of 83 bps over Treasuries.

The financial services company is based in Cincinnati.

Apple firms

Apple’s 3% senior notes due June 20, 2027 (Aa1/AA+/) traded on Friday at 80 bps bid, 78 bps offered, according to a market source.

Apple sold $1 billion of the notes (Aa1/AA+/) on Tuesday at a spread of Treasuries plus 82 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Intel mostly flat

Intel’s 2.7% senior notes due June 17, 2024 (A1/A+/A+) were seen on Friday at 68 bps bid, 66 bps offered, a market source said.

Intel priced $600 million of the seven-year notes (A1/A+/A+) on Tuesday at a spread of Treasuries plus 68 bps.

The semiconductor chip maker is based in Santa Clara, Calif.

Kemper tightens

Kemper’s 4.35% notes due Feb. 15, 2025 were quoted on Friday in secondary trading at 182 bps bid, 178 bps offered, according to a market source.

Kemper priced a $200 million reopening of the notes (Baa3/BBB-/BBB-) on Monday at a spread of Treasuries plus 195 bps.

The company originally sold $250 million of the notes on Feb. 19, 2015 at a spread of 225 bps over Treasuries.

Kemper is a diversified insurance holding company based in Chicago.

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