Supply thins; Principal Life, Municipality Finance price; Quebec on deck; Bayer tightens

By Cristal Cody

Tupelo, Miss., June 27 – Deal action thinned on Wednesday as volatility took hold and credit spreads widened.

Principal Life Global Funding II priced $300 million of two-year senior secured floating-rate notes as the sole reported corporate issuer in the high-grade primary market.

In SSA supply, Municipality Finance plc priced $1 billion of three-year notes.

Quebec also was offering Canadian dollar-denominated global notes on Wednesday that are registered with the Securities and Exchange Commission.

In other corporate deal activity, Toyota Motor Credit Corp. is marketing three tranches of SEC-registered senior notes with fixed-income investor calls that began in the United States, Europe and Asia on Tuesday, a source said.

Week to date, about $2.8 billion of high-grade corporate bonds have priced.

About $15 billion to $20 billion of supply is expected by market sources for the week.

The Markit CDX North American Investment Grade 30 index softened 2 basis points over the day to head out at a spread of 68 bps.

In the secondary market, Bayer AG’s notes tightened 4 bps to 5 bps on Wednesday.

Bank and financial paper traded mostly flat to softer, a source said.

Principal Life sells notes

Principal Life Global Funding II priced $300 million of two-year senior secured floating-rate notes (A1/A+/) at Libor plus 30 bps during the session, a market source said.

Deutsche Bank Securities Inc. was the bookrunner.

Principal Life Global Funding II is a Wilmington, Del.-based financing arm of the Principal Life Insurance Co.

Municipality Finance prices

Municipality Finance (Aa1/AA+/) sold $1 billion of 2.75% three-year notes at mid-swaps plus 3 bps, or Treasuries plus 25.8 bps, in the offering on Wednesday, according to a market source.

The notes were initially talked to price in the mid-swaps plus 5 bps area.

BofA Merrill Lynch, BNP Paribas Securities Corp., RBC Capital Markets Corp. and TD Securities (USA) LLC were the bookrunners.

Municipality Finance is a Helsinki, Finland-based credit institution that provides funding for the public sector in Finland.

Bayer improves

Bayer US Finance II LLC’s 3.875% notes due Dec. 15, 2023 tightened 4 bps to 117 bps bid in secondary trading on Wednesday, a source said.

Bayer sold $2.25 billion of the five-year notes on June 18 at a spread of 115 bps over Treasuries.

The company’s 4.375% notes due Dec. 15, 2028 firmed 5 bps to 153 bps bid.

Bayer sold $3.5 billion of the notes in the June 18 offering at a spread of 155 bps over Treasuries.

The health care and agriculture products company is based in Leverkusen, Germany.

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