Occidental Petroleum, Public Service eye primary; Boeing mixed; American Airlines firms

By Cristal Cody

Tupelo, Miss., Aug. 2 – Activity in the high-grade primary market quieted on Friday with a couple of issuers considering new bond deals.

Occidental Petroleum Corp. held fixed income investor calls for a second day for an offering of up to nine tranches of senior notes to fund its acquisition of Anadarko Petroleum Corp.

BofA Securities, Inc. Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Also on Friday, Public Service Co. of Colorado held fixed income investor calls for a possible offering of first mortgage bonds (A1/A-/A+), according to a market source.

Barclays, Citigroup Global Markets, PNC Capital Markets LLC and TD Securities (USA) LLC are the arrangers.

Investment-grade companies priced more than $23 billion of bonds over the week, in line with market forecasts of about $20 billion to $25 billion of volume for the week.

Looking ahead, supply is expected to be concentrated in the front half of August with volume projected to total in the $70 billion to $80 billion area, market sources said Friday.

Next week, a busy deal calendar is expected with syndicate sources forecasting about $25 billion to $30 billion of supply.

In the secondary market, new issues priced this week were mixed.

Boeing Co.’s $5.5 billion six-tranche offering of senior notes (A2/A/) brought to the market on Monday were mostly softer Friday.

American Airlines, Inc.’s $1.1 billion of series 2019-1 pass-through certificates sold in three tranches on Thursday firmed about 3 basis points to more than 10 bps.

Las Vegas Sands Corp.’s $3.5 billion of senior notes (Baa3/BBB-/BBB-) priced in three tranches at the start of the week headed out about 4 bps to 8 bps tighter than issuance.

Meanwhile, flows in the high-grade space, including corporate bonds, mortgage bonds, agencies and Treasuries, softened for the past week ended Wednesday, Yuri Seliger, a credit strategist with BofA Merrill Lynch, said in a research note released on Friday.

High-grade inflows slowed to $1.7 billion from $3.61 billion in the previous week on the back of slower inflows for short-term high-grade, down to $560 million from $1.29 billion a week earlier, and excluding short-term high-grade, which declined to $1.15 billion from $2.32 billion.

Flows also declined for high-grade funds to $1.29 billion from $2.19 billion in the previous week, Seliger said.

The July jobs report released on Friday came mostly in line with market expectations at 164,000 jobs added over the month, compared to forecasts of a 165,000-jobs gain for the month. The unemployment report was flat at 3.7%, though above the 3.6% market analysts expected.

The June trade deficit was wider than expected at $55.2 billion, compared to $54.6 billion expected.

The Markit CDX North American Investment Grade 32 index eased about 1 bp on Friday to close at a spread of 57 bps.

Boeing notes mixed

Boeing’s 2.7% notes due Feb. 1, 2027 firmed to 78 bps bid, 75 bps offered in secondary trading, a market source said.

The $1 billion tranche of notes priced on Monday with a Treasuries plus 80 bps spread.

Boeing’s $1.25 billion of 3.75% notes due Feb. 1, 2050 softened to 123 bps bid, 120 bps offered in the secondary market.

The notes priced at a spread of 120 bps over Treasuries.

Boeing is a Chicago-based aerospace company.

American Airlines improves

American Airlines’ $578,712,000 of 3.15% class AA senior certificates (Aa3/AA/) tightened to 113 bps bid, 108 bps offered in the secondary market, a source said.

The notes priced Thursday at a spread of 126 bps over Treasuries.

The class AA certificates have a weighted average life of 8.7 years with a final distribution date of Feb. 15, 2032 and a legal distribution date of Aug. 15, 2033.

The commercial airline, which is a subsidiary of AMR Corp., is based in Fort Worth, Texas.

Las Vegas Sands firms

Las Vegas Sands’ 3.2% notes due Aug. 8, 2024 traded at 132 bps bid, 130.5 bps offered on Friday, according to a market source.

The company sold $1.75 billion of the five-year notes on Monday at a spread of 137.5 bps over Treasuries.

Las Vegas Sands is a Las Vegas-based developer of multi-use integrated resorts.

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