Morning Commentary: Patterson-UTI markets notes; FHLBank prints; Hasbro considers deal

By Cristal Cody

Tupelo, Miss., Nov. 7 – New high-grade bond issuance from the energy sector is set to continue on Thursday with a registered 10-year senior note offering from oilfield services company Patterson-UTI Energy Inc. after marketing earlier in the week.

The company (Baa2/BBB) held fixed income investor calls for the deal on Tuesday, a source said.

In other supply on Thursday, the Federal Home Loan Bank System priced $2 billion of two-year Global notes.

Meanwhile over Thursday’s session, toy and game maker Hasbro, Inc. (Baa1/BBB+/BBB-) will hold fixed income investor calls for a possible bond deal, a source said.

BofA Securities, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the arrangers.

Hasbro plans to acquire Entertainment One Ltd. in a $4 billion all-cash transaction. The company was last in the investment-grade bond market in September 2017.

Also on Thursday, AbbVie Inc. kicks off a two-day round of investor calls for a Rule 144A and Regulation S private offering of senior notes (Baa2/A-) with proceeds earmarked to fund its acquisition of Allergan plc.

The benchmark deal was launched on Wednesday and is expected to total in the $20 billion to $30 billion area.

BofA Securities, Barclays and Morgan Stanley & Co. LLC are the lead managers.

Deal volume week to date totals more than $20 billion from new corporate and sovereign, supranational and agency issuance.

About $25 billion to $30 billion of supply was expected by market sources for the week.

Energy issues have been in the forefront this week with deals from Shell International Finance BV, Xcel Energy Inc., Baker Hughes, a GE Co., LLC and co-issuer Baker Hughes Co-Obligor, Inc., National Oilwell Varco, Inc., Commonwealth Edison Co., Consolidated Edison Co. of New York, Inc., Cheniere Energy, Inc. subsidiary Cheniere Corpus Christi Holdings, LLC and Vistra Energy Corp. subsidiary Vistra Operations Co. LLC.

In the secondary market, new energy bonds traded mostly tighter.

Cheniere Corpus Christi’s $1.5 billion of split-rated senior secured notes due Nov. 15, 2029 (Ba1/BBB-/BBB-) that priced on Wednesday improved about 4 basis points in secondary trading, a source said.

The Houston-based energy company priced an upsized $1.5 billion of the 10-year notes on the tight side of guidance at a spread of 190 bps over Treasuries.

The Rule 144A and Regulation S deal was upsized from $1 billion.

Shell International Finance’s $4 billion of guaranteed senior notes (Aa2/AA-) that priced in five-, 10- and 30-year tranches on the tight side of guidance on Monday firmed about 1 bp to 4 bps.

The $1.5 billion tranche of 2.375% notes due Nov. 7, 2029, which priced at a 68 bps over Treasuries spread, traded about 1 bp better in the secondary market, a source said.

Overall investment-grade corporate secondary market trading totaled $22.42 billion on Wednesday, compared to $23.25 billion on Tuesday and $17.95 billion on Monday, according to Trace data.

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