Morning Commentary: Zimmer, Entergy Arkansas, Ohio Power on tap as market tone improves

By Cristal Cody

Tupelo, Miss., March 13 – The tone in the financial markets improved enough early Friday to convince a few high-grade issuers to tap the primary market after a volatile week that saw the stock market dive into bear territory, sources report.

Zimmer Biomet Holdings, Inc. is on deck with two tranches of fixed-rate notes.

The deal includes notes due Jan. 15, 2026 with initial price talk in the Treasuries plus 250 basis points area and notes due March 20, 2030 that are talked to print in the 262.5 bps spread area.

Entergy Arkansas, LLC plans to price a $100 million add-on to its 4% first mortgage bonds due June 1, 2028, which were first issued in a $250 million offering on May 11, 2018.

Initial price talk is in the Treasuries plus 185 bps area.

In addition, Ohio Power Co. is offering $350 million of 10-year senior notes on Friday.

The notes are initially talked to price with a spread in the Treasuries plus 185 bps area.

High-grade supply week to date totals more than $5 billion with the bulk of issuance seen on Tuesday.

Stocks opened the day better after indices closed Thursday down nearly 10% across the board on coronavirus-related concerns in the United States.

The S&P 500 index was up 3.52% early Friday after ending the previous day down 9.51%.

The Dow Jones industrial average recovered 3.01% over the morning after finishing Thursday with a 9.99% decline.

Treasuries softened with the benchmark 10-year note yield up 4.9 bps at 0.887% early Friday.

New issues priced earlier in the week were last seen softer than issuance, a market source said.

JPMorgan Chase & Co.’s $2.25 billion of new 2.005% fixed-to-floating rate senior notes due March 13, 2026 (A2/A-/AA-) widened nearly 40 bps to the 181 bps area.

The notes priced on Tuesday at a spread of Treasuries plus 145 bps.

Initial price guidance was in the Treasuries plus 160 bps area.

Secondary market volume has been strong over the week with $27.42 billion of high-grade corporate bonds traded on Thursday, $27.78 billion on Wednesday, $29.12 billion on Tuesday and $19.1 billion on Monday, according to Trace data.

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