Light supply eyed; A.P. Moller-Mærsk starts roadshow; bonds mostly soften, MasterCard eases

By Cristal Cody

Tupelo, Miss., May 31 – The high-grade primary market stayed quiet on Friday as trade war concerns took hold.

Market tone was risk-off following the U.S. government’s surprise announcement of tariffs on Mexico goods, a source said.

Supply ended below syndicate forecasts with nearly $6 billion of notes priced over the holiday-shortened market week.

About $10 billion to $15 billion of deal volume was expected this week, according to syndicate sources.

Volume in the week ahead will be dependent on market tone and geopolitical events, sources report.

About $10 billion to $15 billion of issuance is predicted in the upcoming week.

For June, syndicate sources forecast about $85 billion of deal volume.

Lipper US Fund Flows on Thursday reported outflows for corporate investment-grade funds jumped to $5.1 billion for the week ended May 29 from $756 million of outflows in the previous week.

The large outflow from Lipper was due to internal transfers at Fidelity Investments Inc. instead of investors redeeming funds, a source said.

Overall inflows in the high-grade space, which includes corporates, mortgages, Treasuries and agencies, improved for the week ended Wednesday, according to a BofA Merrill Lynch research report released on Friday that cited data from EPFR Global.

Inflows improved to $2.67 billion from a low $310 million print in the prior week, “a level similar to the average pace so far this year,” Yuri Seliger, a credit strategist at BofA Merrill Lynch, said in the note.

The short-term high-grade space saw a $430 million inflow this week from a $220 million outflow in the prior week.

Excluding short-term inflows climbed to $2.24 billion from $540 million a week ago.

In addition, inflows rose for funds to $1.66 billion from $80 million and for ETFs to $1.01 billion from $230 million in the previous week, the report said.

Elsewhere on Friday, A.P. Moller-Mærsk A/S kicked off a roadshow for a dollar-denominated Rule 144A and Regulation S offering of notes.

The Markit CDX North American Investment Grade 32 index closed more than 3 basis points wider at a spread of 70 bps.

In the secondary market, new issues priced this week were mostly weaker than issuance, a source said.

MasterCard Inc.’s $2 billion two-part sale of notes (A1/A+/) priced on Tuesday in the week’s biggest deal widened about 1 bp to 3 bps.

In the energy space, new issues from Entergy Mississippi LLC and Southern California Gas Co. tightened, while notes priced this week from Pennsylvania Electric Co., San Diego Gas & Electric and Southwest Gas Corp. softened, a source said.

Entergy Mississippi’s 3.85% first mortgage bonds due June 1, 2049 priced on Thursday improved 2 bps on the bid side in the secondary market.

In other secondary trading, bank and financial paper was mostly wider on the day, a source said.

Wells Fargo & Co.’s 4.15% medium-term notes due Jan. 24, 2029 traded about 5 bps weaker on Friday but remain better than issuance.

A.P. Moller-Mærsk eyes deal

A.P. Moller-Mærsk (Baa3/BBB) started a roadshow in London and New York on Friday for a dollar-denominated Rule 144A and Regulation S offering of notes, according to a market source.

The fixed income investor meetings will continue through Tuesday.

Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and SMBC Nikko Securities America, Inc. are the bookrunners.

A.P. Moller-Maersk is an integrated container shipping company based in Copenhagen, Denmark.

MasterCard eases

In the secondary market, MasterCard’s 2.95% notes due June 1, 2029 traded on Friday at 71 bps bid, 68 bps offered, a source said.

MasterCard sold $1 billion of 2.95% notes due June 1, 2029 at a spread of 70 bps plus Treasuries.

The company’s 3.65% notes due June 1, 2049 eased to 98 bps bid, 95 bps offered in secondary trading.

The notes were priced in a $1 billion tranche on Tuesday at a Treasuries plus 95 bps spread.

MasterCard is a Purchase, N.Y.-based global payment solutions company.

Entergy Mississippi firms

Entergy Mississippi’s 3.85% first mortgage bonds due June 1, 2049 (A2/A/) traded on Friday at 125 bps bid, 120 bps offered, according to a market source.

The company sold $300 million of the bonds on Thursday at a Treasuries plus 127 bps spread.

Entergy Mississippi is a subsidiary of New Orleans-based power provider Entergy Corp.

Wells Fargo softens

Wells Fargo’s 4.15% medium-term notes due Jan. 24, 2029 (A2/A-/A+) traded on Friday about 5 bps wider at 135 bps bid, a market source said.

Wells Fargo sold $2.5 billion of the 10-year notes on Jan. 16 at a spread of Treasuries plus 145 bps.

The financial services company is based in San Francisco.

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