Morning Commentary: Pfizer, Norfolk to price; Walgreens stronger; credit spreads open tighter

By Cristal Cody

Eureka Springs, Ark., May 31 – Investment-grade issuers including Pfizer Inc. and Norfolk Southern Corp. prepared to tap the bond market later on Tuesday following the long holiday weekend.

In the secondary market, Walgreens Boots Alliance Inc.’s $6 billion of notes (Baa2/BBB/BBB) that priced in five tranches on Thursday traded about 4 basis points to 12 bps tighter, improving the most on the long end.

The Markit CDX North American Investment Grade index improved about 1 bp from Friday to a spread of 76 bps early Tuesday.

The three-month Libor yield was unchanged at 67 bps at the start of the day.

Secondary trading volume dropped to $5.3 billion on Friday before the markets closed early for the holiday weekend, according to Trace.

Walgreens tightens

Walgreens’ 2.6% notes due 2021 tightened to 120 bps offered in the secondary market, a source said.

The company sold $1.5 billion of the five-year notes on Thursday at Treasuries plus 125 bps.

Walgreens’ tranche of 3.45% notes due 2026 were quoted at 161 bps offered on Tuesday. The notes were sold in a $1.9 billion offering in Thursday’s sale at Treasuries plus 165 bps.

Walgreens’ 4.65% bonds due 2046 were stronger in the secondary market at 192 bps offered. The company sold $600 million of the long bonds on Thursday at 205 bps over Treasuries.

Walgreens is a Deerfield, Ill.-based drugstore chain.

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