Morning Commentary: Investment-grade issuers mostly quiet; ING remains in deal pipeline

By Cristal Cody

Tupelo, Miss., Dec. 4 – Activity in the high-grade bond market opened on a quiet note on Tuesday with no reported issuers marketing deals following more than $4 billion of issuance in the previous session.

ING Groep NV (Baa1/A-/A+) was expected to price an offering of fixed-rate subordinated resettable notes due Dec. 12, 2033 on Monday but the deal was postponed and remains in the pipeline.

The notes were initially talked to price in the Treasuries plus 275 basis points area.

Citigroup Global Markets, Goldman Sachs & Co., HSBC Securities (USA) Inc., ING Financial Markets LLC and UBS Securities LLC are the lead managers of the Rule 144A and Regulation S offering.

High-grade deal volume was expected to reach the $15 billion to $20 billion area this week but may not hit those totals with the mid-week market closure. The bond markets, along with stock markets and the U.S. government, will be closed on Wednesday as part of a national day of mourning for former president George Bush.

Stocks opened weaker after rallying on Monday on plans to delay tariffs on Chinese goods that were set to take effect Jan. 1.

In the secondary high-grade market, $20.94 billion of bonds traded on Monday, according to Trace data.

Pacific Gas & Electric Co.’s senior notes were flat to modestly softer early Tuesday after weakening in November when the company’s power lines were linked to the California Camp Fire and its bonds downgraded, a market source said.

The San Francisco electric and natural gas utility’s 4.25% notes due Aug. 6, 2023 traded at 93.38 over the morning after going out on Monday at 93.68.

The notes dropped to the 89 area from 99.51 on Nov. 15.

Pacific Gas & Electric (Baa2/BBB-/BBB-) sold $500 million of the notes on Aug. 2 at 99.76 to yield 4.3% and a spread of 145 bps over Treasuries.

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