High-grade primary expected to be busy in December; Pfizer, Burlington Northern tighten

By Aleesia Forni and Cristal Cody

New York, Nov. 25 – The investment-grade primary was quiet on Wednesday ahead of the market’s closure for the Thanksgiving holiday.

As was expected, no new deals came to market during the session.

The empty trading day left the week’s total supply at $4.14 billion, falling just short of what was predicted to be a $5 billion to $10 billion week.

With little to speak of in the way of primary action on Wednesday, sources were looking ahead to what is predicted to be a deluge of new deals beginning next week.

Between $40 billion and $50 billion of new investment-grade issuance is expected in December, with the bulk of that predicted to hit the market prior to the Federal Reserve’s two-day policy meeting mid-month.

Around $20 billion to $25 billion of that total is expected to price next week.

Investment-grade bonds and credit spreads stayed mostly better over the session as trading desks thinned.

Pfizer Inc.’s 3.4% senior notes due 2024 tightened 6 basis points on Wednesday and traded more than 10 bps better since Monday following the company’s announcement of a $160 billion merger with Dublin-based Allergan plc.

Burlington Northern Santa Fe LLC’s debentures (A3/BBB+) traded about 6 bps to 7 bps tighter over the day.

Dollar General Corp.’s 4.15% senior notes due 2025 firmed 2 bps after trading 1 bp wider on Tuesday.

AT&T Inc.’s bonds (/BBB+/A-) were mixed, with the long end tighter in secondary trading.

The Markit CDX North American Investment Grade 25 index firmed 1 bp to end at a spread of 85 bps.

Pfizer improves

Pfizer’s 3.4% notes due 2024 firmed 6 bps on Wednesday to head out at 91 bps bid in the secondary market, a source said.

The bonds were quoted flat on Monday at 103 bps bid.

Pfizer sold $1 billion of the notes (A1/AA/) on May 13, 2014 at a spread of Treasuries plus 80 bps.

The biopharmaceutical company is based in New York City.

Burlington Northern tightens

Burlington Northern’s 3.65% debentures due 2025 traded 6 bps tighter at 118 bps bid on Wednesday afternoon, a source said.

The company sold $350 million of the bonds on Aug. 13 at a spread of Treasuries plus 148 bps.

The company’s 4.7% debentures due 2045 tightened 7 bps to 163 bps bid in secondary trading.

Burlington Northern sold $650 million of the bonds in the Aug. 13 offering at Treasuries plus 185 bps.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

Dollar General firms

Dollar General’s 4.15% senior notes due 2025 firmed 2 bps to 210 bps bid on Wednesday, a market source said.

Dollar General priced $500 million of the notes (Baa3/BBB) on Oct. 15 at a spread of Treasuries plus 215 bps.

The discount retailer is based in Goodlettsville, Tenn.

AT&T mixed

AT&T’s 3.4% notes due 2025 eased about 1 bp over the day to 162 bps bid in secondary trading, a market source said.

The company sold $5 billion of the notes on April 23, 2015 at a spread of 150 bps over Treasuries.

AT&T’s 4.75% bonds due 2046 firmed 3 bps to 219 bps bid.

AT&T sold $3.5 billion of the bonds in the April 23 offering at 215 bps over Treasuries.

The telecommunications company is based in Dallas.

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