Deal volume thins; Northrop Grumman eyes new bonds; PepsiCo firms; Michael Kors tightens

By Cristal Cody

Tupelo, Miss., Oct. 6 – The high-grade primary bond market stayed quiet on Friday ahead of the long holiday weekend.

Northrop Grumman Corp. (Baa2/BBB/BBB+) held investor calls on Friday for a possible bond offering, a source said.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the arrangers.

Market sources expect the upcoming short week to include a focus on bank earnings releases from Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.

About $15 billion to $20 billion of deal volume is expected by market participants for the week.

Banco Santander, SA plans to hold a roadshow from Wednesday to Oct. 13 for a Rule 144A and Regulation S dollar-denominated offering of senior notes (A3/BBB+/A-), according to a market source.

Citigroup Global Markets Inc., J.P. Morgan Securities, Morgan Stanley & Co. LLC and Santander Investment Securities Inc. are the arrangers.

In the secondary market on Friday, PepsiCo Inc.’s notes (A1/A+/) sold on Thursday traded about 2 basis points tighter.

Michael Kors (USA), Inc.’s 4% guaranteed senior notes due Nov. 1, 2024 priced the previous day to fund the company’s acquisition of shoe maker Jimmy Choo plc tightened about 10 bps from issuance.

Bank and financial paper was mixed on Friday, a source said.

Citigroup’s 4.125% subordinated notes due July 25, 2028 (Baa3/BBB/A-) traded about 1 bp softer during the session. Citigroup priced a $250 million reopening of the notes on May 3 at a spread of 186 bps over Treasuries.

After firming most of the week, the Markit CDX North American Investment Grade 29 index eased about 1 bp to close the day at a spread of 54 bps.

PepsiCo improves

PepsiCo’s 2% senior notes due April 15, 2021 traded on Friday at 36 bps bid, 33 bps offered, a market source said.

The $1 billion tranche of notes priced on Thursday at a spread of Treasuries plus 38 bps.

The company’s $1.5 billion of 3% senior notes due Oct. 15, 2027, priced at a Treasuries plus 68 bps spread, firmed to 66 bps bid, 63 bps offered in the secondary market.

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

Michael Kors tightens

Michael Kors’ 4% notes due Nov. 1, 2024 (Baa3/BBB-/BBB-) tightened to 180 bps bid, 176 bps offered in the secondary market, a source said.

The company sold $450 million of the notes on Thursday on the tight side of guidance at a spread of Treasuries plus 190 bps.

The notes were initially guided in the Treasuries plus 225 bps area with talk later tightening to the 200 bps area, plus or minus 10 bps.

The notes are guaranteed by parent company Michael Kors Holdings Ltd. and existing and future subsidiaries that guarantee debt or are borrowers under its new $2 billion senior credit facilities.

Michael Kors (USA) is a New York-based designer and manufacturer of clothing, accessories and footwear.

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