Summer high-grade bond supply thins; CDP pulls offering; July deal pipeline builds

By Cristal Cody

Tupelo, Miss., July 1 – Volatility kept bond issuance in the high-grade space light over the week, and at least one issuer pulled out of the primary market.

High-grade issuers priced $7.85 billion of bonds in the first two sessions.

Deal volume ceased after Tuesday.

CDP Financial Inc. (Aaa/AAA/AAA) postponed a dollar-denominated Rule 144A and Regulation S offering of three-year notes due to volatile market conditions on Tuesday, a company spokesman told Prospect News.

The spokesman for the Montreal-based financing arm of La Caisse de depot et placement du Quebec said the company looks “forward to re-engaging with investors in the near future.”

CDP’s notes were initially talked to price at the SOFR mid-swaps plus 42 basis points area before the deal was postponed, a source said.

About $10 billion to $15 billion of front-loaded supply was expected over the short week ahead of Friday’s early market close for the Independence Day holiday in the United States.

Nomura softens

Market conditions have not been too enticing, sources note.

The New York Federal Reserve announced Wednesday that it launched a monthly corporate bond market distress index to measure U.S. corporate primary and secondary market conditions.

According to the June index, the investment-grade segment is “strained.”

New issues priced this week were mostly softer in secondary trading, including Nomura Holdings Inc.’s $1.9 billion four-part offering on Tuesday, sources said.

The company’s senior notes were quoted about 3 bps to more than 15 bps wider than issuance.

Nomura’s 5.386% notes due 2027 (Baa1/BBB+) eased to 233 bps bid, 227 bps offered, a source said.

The issue priced in a $500 million tranche at par to yield a spread of Treasuries plus 215 bps, tighter than talk at the 230 bps area.

Existing high-grade paper also has been under pressure, and notes from issuers including Oracle Corp. and Amazon.com Inc. traded over the week on handles in the 60s to low 80s, a source said.

Celanese in pipeline

Shut-outs became the norm in June with the month posting about $70 billion of deal volume, short of the $100 billion range expected.

July volume is expected to remain in the $70 billion to $80 billion range with market conditions, the Fourth of July holiday and second-quarter blackouts anticipated to keep issuance light, sources said.

Supply in the short week ahead is pegged at the $10 billion to $15 billion range, according to market sources.

The July high-grade deal pipeline is building with an eye toward mergers-and-acquisitions-related financing deals.

Celanese Corp. is in the pipeline after holding fixed income investor calls on Monday and Tuesday for potential dollar- and euro-denominated notes to fund the $11 billion cash acquisition of DuPont de Nemours Inc.'s Mobility & Materials segment, a source said.

The deal size is pegged at the $9.5 billion area.

An offering targeted at $20 billion from Oracle Corp. following the company closing in June on its $28.3 billion acquisition of Cerner Corp. also remains in the pipeline.

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