Morning Commentary: Heavy supply in sight for week; Charter, FedEx, GM Financial on tap

By Cristal Cody

Tupelo, Miss., Jan. 14 – Depending on market tone, heavy supply of about $30 billion to $40 billion or higher of high-grade issuance is expected by syndicate sources this week.

A few issuers announced details of new deals early Monday.

Charter Communications, Inc. subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. are offering new senior secured notes and an add-on to its 5.75% senior secured notes due April 1, 2048.

FedEx Corp. plans to price notes due 2022.

General Motors Financial Co., Inc. is on deck with a four-part offering, which includes a tap of its 4.2% senior notes due Nov. 6, 2021 and three tranches of new notes.

Elsewhere, other issuers are marketing potential bond offerings.

Western and Southern Life Insurance Co. is holding investor calls on Monday and Tuesday for a Rule 144A- and Regulation S-eligible dollar-denominated bond offering of fixed-to-floating rate surplus notes due 2069.

Fox Corp. began a round of fixed income investor calls on Friday for a possible deal.

Meanwhile, CPPIB Capital Inc. is in the deal pipeline with a Rule 144A- and Regulation S-eligible dollar-denominated transaction.

Supply was heavy last week with about $41 billion of volume and beat syndicate deal forecasts.

In the broader financial markets, the U.S. government shutdown has mostly been ignored, but the impact soon will be felt with the lack of data releases, including this week’s previously scheduled release of December retail sales and housing reports, sources said.

The Commerce Department’s web site bears a banner at the top noting that “Due to a lapse in federal funding portions of this website are not being updated.”

In other action, Pacific Gas & Electric Co. has become the “first fallen angel of 2019 and one of the largest in history relative to the size of the U.S. high yield market, as $17.5 [billion] of bonds will travel to the U.S. HY corporate index in February,” according to a BofA Merrill Lynch report released on Monday.

Pacific Gas & Electric’s senior notes (Ba3/BB-/BBB-) were downgraded to junk last week by Moody’s Investors Service and S&P Global Ratings.

The company announced on Monday it plans to file for Chapter 11 bankruptcy protection on Jan. 29 in the wake of liability claims over 2017 and 2018 northern California wildfires.

Pacific Gas & Electric’s 4.25% notes due Aug. 6, 2023 traded on Monday morning at 79.5, a source said. The notes went out on Friday at 86.75.

The San Francisco electric and natural gas utility sold $500 million of the notes on Aug. 2 at 99.76 to yield 4.3% and a spread of 145 basis points over Treasuries.

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