Higher deal supply forecast; National Fuel sets calls; PG&E eases; American Express firms

By Cristal Cody

Tupelo, Miss., Aug. 3 – Investment-grade deal action stayed quiet on Friday with deal volume expected to climb over the coming week.

Issuers priced about $8 billion of investment-grade bonds during the week, coming in slower than market sources expected.

About $15 billion to as much as $25 billion of bond supply had been forecast, though some sources predicted volume to stay on the light side due to early to mid-week central bank meetings that included the Federal Reserve and Bank of Japan as well as Friday’s release of the monthly employment report.

The Labor Department announced on Friday that total nonfarm payroll employment rose by 157,000 in July, while the unemployment rate dipped by 0.1% to 3.9%. Market analysts had expected a job gain of 193,000 and a higher jobless rate of 4.0% for the month.

Looking ahead to the upcoming week, syndicate sources predict about $20 billion to $25 billion of supply.

Also ahead, Williamsville, N.Y., energy company National Fuel Gas Co. (Baa3/BBB/BBB) plans to hold fixed-income investor calls on Monday, a market source said. BofA Merrill Lynch, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC are the arrangers.

In the secondary market, new issues were mixed in trading on Friday.

Pacific Gas & Electric Co.’s $800 million two-tranche offering of fixed-rate senior notes priced Thursday softened 2 basis points on the bid side.

American Express Co.’s $2.35 billion of senior notes (A3/BBB+/A) priced in two tranches on Tuesday tightened about 3 bps.

The Markit CDX North American Investment Grade 30 index ended mostly unchanged on the day at a spread of 59 bps.

For the week ended Aug. 1, Lipper US Fund Flows reported inflows of $1.21 billion for corporate investment-grade funds, compared to the $1.99 billion of inflows in the previous week and $2.02 billion of reported inflows in the prior week.

Inflows to the overall high-grade space, which includes corporates, Treasuries, agencies and mortgages, rose to $2.23 billion for the week ended Wednesday from $1.61 billion in the previous week, according to a BofA Merrill Lynch research note released on Friday.

Short-term inflows improved to $800 million from $690 million, while outside-of-short-term climbed to $1.43 billion from $910 million.

“ETF inflows, which tend to be more dominated by institutional investors, increased notably to $0.96 [billion] from $0.15 [billion], while inflows to high grade funds declined a bit to $1.27 [billion] from $1.46 [billion],” Yuri Seliger, a BofA Merrill Lynch analyst, said in the note.

PG&E notes ease

Pacific Gas & Electric’s 4.25% notes due Aug. 6, 2023 eased in secondary trading to 147 bps bid, 144 bps offered, a market source said.

The company (A3/BBB/BBB+) sold $500 million of 4.25% notes due Aug. 6, 2023 on Thursday at a spread of 145 bps over Treasuries, tighter than initial talk in the Treasuries plus 155 bps area.

PG&E’s 4.65% notes due Aug. 6, 2028 widened to 172 bps bid, 169 bps offered.

The $300 million tranche priced in Thursday’s offering with a Treasuries plus 170 bps spread. Initial price talk was in the Treasuries plus 180 bps to 185 bps area.

The electric and natural gas utility is based in San Francisco.

American Express firms

American Express’ 3.7% notes due Aug. 3, 2023 traded on Friday at 85 bps bid, 83 bps offered, according to a market source.

The company sold $1.85 billion of the five-year notes on Tuesday at a spread of 87.5 bps over Treasuries.

American Express is a New York-based credit card services company.

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