Strong high-grade supply forecast; Vodafone, ASB plan roadshows; Petrofac markets notes

By Cristal Cody

Tupelo, Miss., May 11 – The high-grade primary market stayed quiet on Friday following a week of strong issuance and ahead of an expected busy deal pipeline.

Syndicate sources forecast about $30 billion to $35 billion of new bond supply in the week ahead.

More than $44 billion of investment-grade bonds priced this week, compared to market forecasts of about $30 billion to $35 billion of supply.

Several issuers are marketing bond deals.

Vodafone Group plc and ASB Bank Ltd. plan to hold deal roadshows later in May.

Split-rated issuer Petrofac Ltd. also is expected to tap the primary market following a two-day round of fixed income investor calls this week.

New bonds have traded mostly tighter in the secondary market this week, sources said.

GlaxoSmithKline plc’s $6 billion of notes (A2/A+) priced in five tranches on Thursday tightened about 5 basis points to 8 bps.

The Markit CDX North American Investment Grade 30 index firmed about 1 bp to close Friday at a spread of 59 bps.

Vodafone eyes deal

Vodafone Group (Baa1/BBB+/BBB+) plans to hold a roadshow beginning May 16 for a dollar-denominated note offering, according to a market source.

The deal is expected to include multiple tranches.

BofA Merrill Lynch is the arranger.

Vodaphone is a multinational telecommunications company based in London.

ASB offers notes

ASB Bank (A1/AA-/AA-) intends to hold a roadshow May 14 to May 24 in U.S. and Asia markets for a Rule 144A and Regulation S dollar-denominated offering of five-year notes, a source said.

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

ASB Bank is an Auckland, New Zealand-based subsidiary of the Commonwealth Bank of Australia.

Petrofac markets notes

Petrofac (Ba1/BBB-/BBB-) is the deal pipeline with a Rule 144A and Regulation S offering of dollar-denominated notes, a market source said.

The company held fixed-income investor calls on Wednesday and Thursday.

J.P. Morgan Securities and MUFG are the arrangers.

Petrofac is an oilfield services provider with its main corporate office based in London.

GlaxoSmithKline firms

In the secondary market on Friday, GlaxoSmithKline’s tranche of 3.875% notes due May 15, 2028 traded at 83 bps bid, 80 bps offered, a source said.

The notes priced in a $1.75 billion offering on Thursday at a spread of Treasuries plus 90 bps.

GlaxoSmithKline guarantees the notes, which were issued via GlaxoSmithKline Capital plc.

The global health care company for pharmaceuticals and consumer health products is based in Brentford, England.

Inflows decline

For the week ended May 9, Lipper US Fund Flows reported inflows of $804 million for corporate investment-grade funds, down from reported inflows of $997 million in the previous week and $2.01 billion in the prior week.

Inflows to U.S. bond funds and ETFs continued to weaken this past week ending on May 9, Yuri Seliger, an analyst with BofA Merrill Lynch, said in a note released Friday.

“After five consecutive weeks of declines inflows to fixed income shrank to just $0.80 [billion],” Seliger said, citing data from EPFR Global and BofA Merrill Lynch Global Research. “The decline this past week was driven by weaker flows for high grade outside of short-term and high yield, which were partially offset by stronger flows to government bonds, munis and short-term high grade.”

Inflows to high grade fell to $470 million from $1.63 billion with the decline “driven entirely” by flows outside of short-term, which had a $660 million outflow following a $640 million inflow the prior week, Seliger said.

Inflows to short-term high grade rose to $1.13 billion from $990 million, according to the note.

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