Morning Commentary: Phillips 66, Mondelez, Keurig Dr Pepper, BAE, Estee Lauder on tap

By Cristal Cody

Tupelo, Miss., April 7 – High-grade corporate and sovereign, supranational and agency bond supply is expected in the primary market on Tuesday, sources report.

Several issuers are offering more than one tranche of bonds.

Phillips 66 plans to price two tranches of guaranteed senior notes (Baa3/BBB) that include three- and five-year notes with initial talk in the Treasuries plus 450 basis points area.

Mondelez International, Inc. expects to bring a $1 billion two-tranche offering of notes (Baa1/BBB) to the primary market on Tuesday. The company is offering $500 million of three-year notes that are talked to price at the Treasuries plus 237.5 bps area and $500 million of 10-year notes with initial guidance at the 275 bps spread area.

Keurig Dr Pepper Inc. also is on deck with two tranches of senior notes (Baa2/BBB) set to price on Tuesday. The 10- and 30-year bonds are talked to print with a spread in the Treasuries plus 300 bps area.

Meanwhile, BAE Systems plc (Baa2/BBB/BBB) intends to price new 10-year notes following a round of fixed income investor calls held Monday. The notes are guided to price at the 312.5 bps over Treasuries area.

Avangrid, Inc. is marketing new five-year green notes (Baa1/BBB/BBB+) during the session. Initial price talk is in the Treasuries plus 325 bps area.

Estee Lauder Cos. Inc. also is on deck with 10-year senior notes (A1/A+) that are initially talked to price in the Treasuries plus 237.5 bps area.

Brookfield Finance Inc. intends to bring a guaranteed registered offering of 10-year senior notes (Baa2/BBB) during the session. Initial price guidance on the issue is in the 375 bps to 387.5 bps over Treasuries area.

The energy space also is expected to see deal activity on Tuesday.

NiSource Inc. is offering 10-year notes (Baa2/BBB/BBB) with initial talk at the 350 bps spread area.

Narragansett Electric Co. (A3/A) also is marketing 10-year notes. Initial price talk is in the Treasuries plus 300 bps to 312.5 bps area.

In the SSA space, Ontario Teachers’ Finance Trust (Aa1/AA+) launched a $1 billion Rule 144A and Regulation S offering of five-year senior notes early Tuesday at mid-swaps plus 80 bps.

Also during the session, CDP Financial Inc. (Aaa/AAA/AAA) plans to price a dollar-denominated offering of three-year senior notes. Price guidance tightened to Treasuries plus 67 bps from initial talk in the Treasuries plus 70 bps area.

In addition, BNG Bank NV (Aaa/AAA/AA+) is offering $2 billion of three-year bonds on Tuesday. Price guidance firmed to mid-swaps plus 32 bps from initial talk in the 35 bps spread area.

In other activity on Tuesday, Prudential plc will continue a second day of fixed income investor calls for a registered offering of 10-year senior notes.

Investment-grade supply totaled nearly $20 billon on Monday.

As much as $80 billion of volume is expected by market sources this week.

Heavy front-loaded issuance was anticipated with the markets set to close early on Thursday and remain closed on Friday for the Good Friday holiday.

Market tone was mostly positive over the morning with stock indices higher and high-grade ETFs mixed.

The iShares iBoxx Investment Grade Corporate Bond ETF improved 0.45%.

The Pimco Investment Grade Corporate Bond Index ETF edged down 7 cents, or 0.075%.

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