High-grade primary quiets after heavy supply; financial issuance eyed; Panasonic firms

By Cristal Cody

Tupelo, Miss., July 12 – High-grade market activity quieted on Friday after a heavy week of issuance and in front of what is expected to be a deal-packed week ahead.

More than $32 billion of investment-grade corporate bonds priced this week, beating syndicate dealer forecasts of about $15 billion to $20 billion of volume.

In the upcoming week, market sources anticipate about $25 billion to $30 billion of supply led by bank and financial issuers.

The major U.S. banks will come out of blackout reporting periods next week on the release of second quarter earnings results. Citigroup Inc. will release its earnings report on Monday, followed by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co. on Tuesday, Bank of America Corp. on Wednesday and Morgan Stanley on Thursday.

The Markit CDX North American Investment Grade 32 index ended Friday mostly unchanged at a spread of 53 basis points.

New issues priced this week traded mostly better than issuance in the secondary market.

Mitsubishi UFJ Financial Group, Inc.’s $6.5 billion of senior notes (A1/A-/A) priced in four tranches on Thursday were wrapped around issuance to about 2 bps tighter.

Panasonic Corp.’s $2.5 billion of notes (A3/A-/BBB) priced in three tranches in a Rule 144A and Regulation S offering on Wednesday headed out about 5 bps to 7 bps better.

Total Capital International’s $4 billion of guaranteed notes (Aa3/A+) priced in four tranches on Monday improved about 1 bp to 4 bps in secondary trading.

Meanwhile, the overall investment-grade space saw weaker flows for the week ended Wednesday, according to a BofA Merrill Lynch global research note released on Friday.

High-grade inflows, including for corporate bonds, agencies, Treasuries and mortgages, declined to $2.25 billion from $3.97 billion a week earlier, credit strategist Yuri Seliger said in the note.

Short-term high-grade flows were little changed at $910 million versus $920 million in the prior week.

Excluding short-term flows dropped to $1.33 billion from $3.05 billion a week ago, Seliger said.

ETF inflows slipped to $50 million from $380 million in the previous week.

The “decline in IG flows was led by funds, where flows fell to $2.2 [billion] from $3.59 [billion],” Seliger said.

Mitsubishi mixed

Mitsubishi UFJ Financial Group’s 3.195% notes due July 18, 2029 traded flat on Friday at 105 bps bid, a market source said.

Mitsubishi priced $1.75 billion of the 10-year bonds on Thursday at par to yield a 105 bps spread over Treasuries.

The company’s $1.5 billion of 3.751% bonds due July 18, 2039 firmed to 106 bps bid, 104 bps offered.

The bonds priced Thursday at par with a 108 bps spread over Treasuries.

Mitsubishi UFJ Financial Group is a Tokyo-based bank.

Panasonic tightens

Panasonic’s 3.113% notes due July 19, 2029 traded on Friday at 97 bps bid, 94 bps offered, according to a market source.

Panasonic priced $500 million of the 10-year notes on Wednesday at a spread of 105 bps over Treasuries, on the firm side of guidance in the 110 bps area.

Panasonic is an electronics company based in Kadoma-shi, Osaka, Japan.

Total Capital improves

Total Capital International’s 2.829% notes due Jan. 10, 2030 were quoted in the secondary market better on Friday at 74 bps bid, 71 bps offered, a source said.

The company sold $1.25 million of the long 10-year notes on Monday at a Treasuries plus 78 bps spread.

The notes are unconditionally guaranteed by parent company Total S.A.

Total Capital is a financing arm of the Courbevoie, France-based oil and gas company.

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