High-grade issuers deluge primary; CVS, Home Depot, Nvidia, financials price; outflows heavy

By Cristal Cody

Tupelo, Miss., March 26 – Investment-grade issuers flooded the primary market with more than $35 billion of supply over Thursday’s session on the heels of stimulus measures to help U.S. businesses and residents affected by the coronavirus.

The deals push week-to-date supply to more than $98 billion.

The Federal Reserve announced earlier in the week it will buy high-grade corporate bonds to improve liquidity.

Issuers on Thursday included Nvidia Corp., Home Depot Inc., CVS Health Corp., Target Corp., CSX Corp., Weyerhaeuser Co., Entergy Louisiana LLC, Huntington Ingalls Industries, Inc., Weyerhaeuser Co., AutoZone, Inc., Consolidated Edison Co. of New York, Inc. and Northwest Natural Gas Co.

Financial supply was strong with new issuance from Goldman Sachs Group Inc., Morgan Stanley, Wells Fargo & Co., State Street Corp., Standard Chartered plc, Raymond James Financial, Inc. and American Financial Group, Inc.

Up to $70 billion of supply was expected by market sources for the week.

High-grade corporate funds outflows remained heavy.

For the past week ended Wednesday, $38.02 billion of outflows were recorded, up from the then-record $35.59 billion of outflows in the prior week, according to Refinitiv Lipper US Fund Flows.

Investment-grade credit spreads continued to improve on Thursday.

The Markit CDX North American Investment Grade 33 index firmed to a spread of 96.72 basis points from 104.87 bps on Wednesday, 107.83 bps on Tuesday and 125.86 bps on Monday.

New issues have mostly tightened significantly from issuance, a market source said.

McDonald’s Corp.’s $3.5 billion of senior medium-term notes (Baa1/BBB+) priced in four tranches on Wednesday were seen about 25 bps to 33 bps tighter in the secondary market.

The fast food operator’s five-year tranche was the most improved after tightening to the 247 bps bid area.

The company sold $750 million of the 3.3% notes notes due July 1, 2025 at 99.965 to yield 3.308% and a spread of 280 bps over Treasuries.

Deere & Co.’s $2.25 billion of notes (A2/A/A) sold in three parts in the previous session came in about 35 bps to 38 bps.

The company’s $700 million of 3.1% notes due April 15, 2030 firmed about 35 bps to the 190 bps area.

Deere priced the notes at 99.811 to yield 3.122%, or a Treasuries plus 225 bps spread.

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