Morning Commentary: CVS offers three tranches; PSEG, NiSource, Marriott, Agree on tap

By Cristal Cody

Tupelo, Miss., Aug. 12 – Several investment-grade issuers marketed new issues at the start of Wednesday’s session with pricing action set to remain steady over the day, sources note.

Week-to-date supply already has beaten syndicate forecasts for the entire week.

Heading up primary action on Wednesday, CVS Health Corp. is on deck with three tranches of fixed-rate senior notes (Baa2/BBB).

The company is offering seven-year notes with initial price talk at the Treasuries plus 120 basis points area, 10-year notes talked at the 135 bps spread area and 20-year notes guided at the 160 bps over Treasuries area.

Public Service Enterprise Group Inc. is offering $1.1 billion of senior notes (Baa1/BBB) in two tranches, including $550 million of five-year notes talked to price at the Treasuries plus 80 bps area and $550 million of 10-year notes talked at the 120 bps spread area.

Meanwhile, NiSource Inc. is marketing two tranches of fixed-rate notes (Baa2/BBB+/BBB) over the day. Initial price talk on a five-year note is at the 90 bps over Treasuries area, while a tranche of notes due Feb. 15, 2031 is talked to print at the 125 bps spread area.

In other supply, Marriott International Inc. is offering fixed-rate senior notes due Oct. 15, 2032 (Baa3/BBB-) on Wednesday. The notes are talked to price with a spread in the Treasuries plus 330 bps area.

Agree LP plans to tap the high-grade primary market on Wednesday with a $300 million offering of 10-year senior notes guaranteed by general partner Agree Realty Corp. and wholly owned subsidiaries. The notes are talked to price at the Treasuries plus 265 bps area.

In addition, Public Service Co. of New Hampshire, doing business as Eversource Energy, expects to price $150 million of 30-year first mortgage bonds (A1/AA-/A+) during the session. Initial guidance is at the Treasuries plus 130 bps area.

In other pricing activity, the Federal Home Loan Bank System announced it intends to price a new two-year Global note on Thursday.

Deal volume already totals more than $31 billion week to date, beating market forecasts of about $25 billion to $30 billion of issuance for the entire week.

Investment-grade issuers priced more than $13 billion of bonds on Monday and over $18 billion of bonds on Tuesday.

Supply so far has been led by Chevron U.S.A. Inc.’s $4 billion seven-tranche sale of senior notes (Aa2/AA) on Monday and Comcast Corp.’s $4.5 billion of senior notes (A3/A-/A-) priced in three tranches on Tuesday.

Eversource firms

In the secondary market, trading volume has slowed in August, according to market sources and Trace data.

On Tuesday, $20.1 billion of high-grade bonds were traded, while just $15.49 billion of corporate notes traded on Monday.

Eversource Energy’s $1.2 billion of senior notes (Baa1/BBB+/BBB+) that priced in three tranches on Tuesday firmed about 2 bps to 7 bps in secondary trading, a source said.

A $600 million tranche of 1.65% notes due Aug. 15, 2030 improved to 93 bps bid.

The notes priced at a spread of Treasuries plus 100 bps, tighter than initial talk at the 130 bps spread area.

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