Morning Commentary: High-grade primary gears up for supply; Union Pacific, Prudential on deck

By Cristal Cody

Tupelo, Miss., Sept. 12 – High-grade corporate and SSA bond issuers prepped early Tuesday to price new deals.

In corporate supply, Union Pacific Corp. and Prudential Financial, Inc. are marketing bonds.

Also on deck in SSA supply, Ontario Teachers’ Finance Trust intends to price a dollar-denominated benchmark-sized offering of notes in a Rule 144A, Regulation S 3c7 deal on Tuesday.

The notes were talked to price in the mid-swaps plus 37.5 basis points area.

Goldman Sachs & Co., J.P. Morgan Securities LLC and RBC Capital Markets, LLC are the bookrunners.

Dexia Credit Local SA plans to price a dollar-denominated Rule 144A and Regulation S offering of senior notes due Sept. 20, 2022.

The notes were talked to price in the mid-swaps plus 65 bps area.

Deutsche Bank Securities Inc., Goldman Sachs, JPMorgan and Societe Generale CIB are the bookrunners.

In addition on Tuesday, the Republic of Finland plans to sell $1 billion of notes due Sept. 21, 2020 that were talked to price in the mid-swaps minus 3 bps area.

Credit Agricole CIB, JPMorgan, Nomura Securities International and Nordea Bank are the bookrunners for the Rule 144A and Regulation S offering.

Market sources expect about $30 billion to $35 billion of supply over the week.

Union Pacific inactive

Investment-grade bonds have been mixed in the secondary market following the flood of issuance, according to market sources.

On Monday, $14.77 billion of investment-grade issues traded, according to Trace.

Early Tuesday, Union Pacific’s last offering of senior notes (A3/A) that priced in March were not active in secondary trading, a source said.

The Omaha-based railroad transportation company’s 3% notes due April 15, 2027 last traded on Monday at 101.41.

Union Pacific priced $500 million of the 10-year notes on March 29 at 98.608 to yield 3.163% and a spread of 77 bps over Treasuries.

The company’s 4% notes due April 15, 2047 were last seen on Monday at 104.24 in the secondary market.

Union Pacific sold $500 million of the 30-year notes at 98.655 to yield 4.078%, or a spread of Treasuries plus 107 bps.

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