Morning Commentary: American Homes 4 Rent, Alberta, Kommuninvest, KfW offerings on deck

By Cristal Cody

Tupelo, Miss., Jan. 15 – Several investment-grade issuers marketed bond offerings early Tuesday following $7 billion of issuance at the start of the week.

American Homes 4 Rent, LP plans to tap the primary market with an offering of senior notes.

In the sovereign, supranational and agency space, the Province of Alberta, Kommuninvest I Sverige AB and KfW are offering notes expected to price on Tuesday.

Alberta is marketing five-year global notes that were initially talked to print in the mid-swaps plus mid-to-high 30 basis points area.

Kommuninvest is offering notes due Sept. 15, 2022 with initial price talk in the mid-swaps plus 15 bps area.

KfW intends to price $1 billion of notes due Feb. 28, 2024 that were initially talked to price with a spread in the mid-swaps plus 11 bps area.

Elsewhere in corporate supply, Western and Southern Life Insurance Co. will continue holding investor calls on Tuesday for a Rule 144A- and Regulation S offering of 50-year fixed-to-floating-rate surplus notes.

Fox Corp. is holding fixed income investor calls for a possible deal.

Meanwhile, Pacific Gas & Electric Co. (Caa3/CC/C) was downgraded further by Moody’s Investors Service and S&P Global Ratings and downgraded to junk by Fitch Ratings after the company announced on Monday that it intends to file for Chapter 11 bankruptcy protection by Jan. 29 in the wake of liability claims over 2017 and 2018 northern California wildfires.

The company is the first fallen angel of 2019 and one of the largest in history, according to a BofA Merrill Lynch report. The company, with $17.5 billion of index-eligible debt, will become the third largest investment-grade default since 1999, behind Lehman Brothers Holdings Inc. and WorldCom, BofA Merrill Lynch said.

If Pacific Gas & Electric files before the end of the month, the San Francisco electric and natural gas utility becomes a “member of a much smaller group of ‘Failing Angel’ IG companies consisting of Enron, Lehman and MF Global that defaulted directly out of IG, before making it into the HY index as Fallen Angels,” the note said.

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