Morning Commentary: Heavy high-grade supply on tap; NIKE, 3M, McDonald’s to price notes

By Cristal Cody

Tupelo, Miss., March 25 – Investment-grade supply remains elevated with several companies marketing bonds early Wednesday following more than $38 billion of issuance in the first two sessions of the week, sources report.

NIKE, Inc. is offering five tranches of fixed-rate notes on Wednesday.

The deal includes five-year notes that are initially talked to price at a spread in the Treasuries plus 240 basis points area, seven-year notes talked to price at the 250 bps spread area, 10-year notes with initial talk in the 250 bps spread area, 20-year notes talked at the 240 bps spread area and 30-year notes talked to price at the 250 bps over Treasuries area.

3M Co. is offering three tranches of notes during the session. The company expects to price five-year notes that are talked with a spread in the Treasuries plus 260 bps area, 10-year notes talked at the Treasuries plus 270 bps area and 30-year bonds guided at the Treasuries plus 285 bps area.

McDonald’s Corp., which priced $2 billion of senior medium-term notes in three tranches on March 3, plans to return to the primary market on Wednesday with four tranches of fixed-rate notes.

The fast food operator is offering five-, seven- and 10-year notes with initial price talk at the Treasuries plus 335 bps area and 30-year notes talked to price at the Treasuries plus 345 bps area.

Archer-Daniels-Midland Co. is on deck with a two-part offering of senior notes that includes five- and 10-year notes talked to price with a spread in the Treasuries plus 312.5 bps area.

Deere & Co. is offering fixed-rate notes due 2025, 2030 and 2050. Initial price talk on all three tranches is in the Treasuries plus 275 bps area.

Meanwhile, Berkshire Hathaway Inc. intends to tap the primary market on Wednesday with two tranches of notes, including 10- and 30-year notes talked at the Treasuries plus 350 bps area.

Pfizer Inc. plans to bring 10-year senior notes that are initially talked to price at the Treasuries plus 237.5 bps area.

O'Reilly Automotive, Inc. is offering 10-year senior notes with initial price talk in the Treasuries plus 375 bps area.

HSBC Holdings plc is on deck with a 10-year issue that is talked to price at the Treasuries plus 450 bps area.

In addition, the Bank of Nova Scotia launched a dollar-denominated offering of covered bonds due March 31, 2023 (Aaa/AAA) at mid-swaps plus 100 bps early Wednesday.

High-grade deal volume totals more than $38 billion week to date, following more than $19 billion of volume on Monday and over $19 billion of issuance on Tuesday.

Up to $70 billion of supply is anticipated after issuers priced more than $61 billion of high-grade bonds last week, market sources report.

The financial markets were upbeat over the morning on news that Congress has reached a stimulus package that is expected to include checks sent directly to Americans to provide relief from the coronavirus-related economic fall-out.

Market tone was improved on Tuesday after the Federal Reserve announced new economic measures Monday that include credit facilities to purchase corporate bonds, sources said.

Stocks recovered some losses over the session with the S&P 500 index ending up 9.38% and the Dow Jones industrial average up 11.37%.

Early Wednesday, stocks continued to improve with the S&P 500 index up 1.03% and the Dow up 2.8%.

Treasuries rallied after softening on Tuesday. The benchmark 10-year note yield declined 2 bps to 0.789% over the morning.

U.S. investment-grade corporate bond exchange-traded funds were positive at the start of the session.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 1.55%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.