Morning Commentary: Sherwin-Williams, Unilever eye multi-tranche deals; PepsiCo notes improve

By Cristal Cody

Tupelo, Miss., May 2 – Investment-grade bond supply is set to be strong over Tuesday’s session with a five-part senior notes offering from Sherwin-Williams Co. to fund its acquisition of Valspar Corp. in the pipeline.

In addition, Unilever Capital Corp. is marketing a four-tranche offering of senior notes.

Mid-America Apartments, LP also plans to price senior notes.

Market sources expect about $25 billion to $30 billion of supply over the week.

In the secondary market, PepsiCo Inc.’s notes (A1/A+) that priced last week traded better early Tuesday after softening in the previous session.

Sherwin-Williams’ existing notes (A3/BBB/BBB) also were active in early secondary trading. The company’s 3.45% notes due Aug. 1, 2025 saw a trade at 103.32 on Tuesday. The notes closed on Monday at 102.43.

Sherwin-Williams sold $400 million of the notes on July 28, 2015 at 99.941 to yield 3.457% and a spread of 120 basis points over Treasuries.

S&P Global Ratings downgraded Sherwin-Williams on Tuesday to BBB from A.

Secondary market volume was light on Monday with $11.95 billion of bond issues traded, Trace reported.

PepsiCo stronger

PepsiCo’s 2.25% notes due May 2, 2022 improved in early secondary trading on Tuesday to 99.68 after weakening on Monday, a source said.

The notes had dropped from 100.14 in secondary trading on Friday to 99.51 on Monday.

PepsiCo sold $750 million of the five-year notes on Thursday at 99.798 to yield 2.293%, or 48 bps over Treasuries.

PepsiCo’s 4% notes due May 2, 2047 traded higher at 98.90 over the morning from where the notes went out on Monday at 98.71.

The notes traded at 99.36 on Friday.

PepsiCo priced $750 million of the 30-year notes in Thursday’s offering at 99.567 to yield 4.025%, or a Treasuries plus 105 bps spread.

The food and beverage company is based in Purchase, N.Y.

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