Morning Commentary: American Express, GM Financial, GATX notes on tap; secondary active

By Cristal Cody

Tupelo, Miss., Nov. 1 – Following lighter pricing action in the previous session, several domestic corporate issuers announced high-grade bond offerings early Thursday.

American Express Co. is marketing three tranches of notes.

General Motors Financial Co., Inc. is offering fixed- and floating-rate notes due 2021.

New York Community Bancorp, Inc. intends to price 10-year fixed-to-floating rate subordinated notes.

GATX Corp. plans to sell senior notes due 2024.

ONE Gas, Inc. also is on deck with a 30-year note deal.

More than $2 billion of bonds priced on Wednesday, bringing week-to-date issuance to over $12 billion.

About $15 billion to $20 billion of issuance is expected by market sources for the week.

Supply is expected to be lighter as the year winds down, sources report.

Syndicate sources expect about $75 billion to $85 billion of deal volume in November.

With a “lack of bank issuance this earnings season, and most M&A related activity behind us, supply volumes are now falling well behind last year’s pace,” Hans Mikkelsen, an analyst with BofA Merrill Lynch, said in a research note released on Thursday. “This is all likely to result in excess demand into year-end and tighter credit spreads.”

High-grade 30-year corporate bond yields now top 5% for the first time since March 2016, according to the note.

Meanwhile, though primary action thinned on Wednesday, secondary market volume soared. The session had $26.81 billion of investment-grade issues traded, compared to $21.03 billion on Tuesday and $17.67 billion on Monday, according to Trace.

New issues are trading nearly 1 basis point tighter on average than their pricing spreads, according to the BofA Merrill Lynch report.

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