Morning Commentary: High-grade supply robust; O’Reilly Automotive, Motorola offer notes

By Cristal Cody

Tupelo, Miss., May 9 – The investment-grade primary market is set to remain active on Thursday with several issuers offering bonds.

O’Reilly Automotive, Inc. plans to price 10-year senior notes registered with the Securities and Exchange Commission.

Motorola Solutions, Inc. also is offering fixed-rate senior notes registered with the SEC.

Already, more than $44 billion of high-grade bonds have priced week to date, in line with the $40 billion to $45 billion of supply expected by market sources.

The year’s two biggest investment-grade bond deals priced on Tuesday and Wednesday.

International Business Machines Corp. priced a $20 billion eight-part offering of notes in the biggest bond deal of the year on Wednesday.

On Tuesday, Bristol-Myers Squibb Co. sold $19 billion of senior notes in nine tranches.

Market sources continue to keep an eye on hefty bond deals expected soon from T-Mobile U.S. Inc. and Fidelity National Information Services, Inc. following roadshows.

T-Mobile U.S. wrapped a roadshow on Wednesday for a bond offering to fund its acquisition of Sprint Corp.

Fidelity National Information Services is holding a roadshow and fixed investor calls through Friday for a multi-currency bond deal to help finance its acquisition of Worldpay Inc.

Elsewhere in the secondary market, trading volume has been light this week with $18.82 billion of bonds traded on Wednesday, $18.2 billion on Tuesday and $12.45 billion on Monday, according to Trace data.

“Dealer inventories are up this week around $1.4 [billion], which is less than we normally see and leaves a smaller than usual overhang for the secondary market going forward,” according to a BofA Merrill Lynch research note released on Thursday.

“Generally speaking, on days last year with the largest M&A deals, inventories rose about $2 [billion]. That is a testament to the current strength of the corporate bond market and if trade concerns fade spreads should perform really well into the summer.”

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