Light deal volume forecast over short holiday week; Walgreens eases; Whole Foods, Kroger flat

By Cristal Cody

Tupelo, Miss., July 3 – The high-grade bond market stayed quiet on Monday ahead of the Fourth of July holiday.

The bond markets closed early at 2 p.m. ET and will be closed on Tuesday for the holiday.

Market sources forecast about $5 billion to $10 billion of new issue volume over the week.

On Monday, the three-month Libor yield reached its highest level since March 2009 at 1.3007%, a source said.

In the secondary market, Walgreens Boots Alliance Inc.’s 3.45% notes due June 1, 2026 eased about 1 basis point. The notes traded about 5 bps tighter on Friday, a day after the retailer announced it will abandon plans to acquire Rite Aid Corp. and instead purchase more than 2,100 Rite Aid stores.

Whole Foods Market Inc.’s 5.2% notes due Dec. 3, 2025 were unchanged.

Kroger Co.’s senior notes (Baa1/BBB/BBB) were flat in the secondary market but remain soft.

The Markit CDX North American Investment Grade index firmed about 1 bp to a spread of 60 bps over the short session.

Walgreens eases

Walgreens’ 3.45% notes due June 1, 2026 traded about 1 bp softer from Friday to 118 bps bid on Monday, according to a market source.

The retailer sold $1.9 billion of the notes on May 26, 2016 at a spread of 165 bps over Treasuries.

Walgreens Boots Alliance is a subsidiary of Deerfield, Ill.-based drugstore operator Walgreens Co.

Whole Foods stable

Whole Foods Market’s 5.2% notes due Dec. 3, 2025 (Baa3/BBB-/) have been unchanged over the last two sessions at 89 bps bid, according to a market source.

The company’s bonds came in about 85 bps on June 16 to 92 bps bid after Amazon.com, Inc. announced it will purchase the natural and organic foods grocer for $13.7 billion in cash.

Austin, Texas-based Whole Foods sold $1 billion of the notes on Nov. 30, 2015 at a Treasuries plus 300 bps spread.

Kroger unchanged

Kroger’s 2.65% notes due Oct. 15, 2026 were flat on the day at 135 bps bid, according to a market source.

Kroger sold $750 million of the notes on Sept. 26 at a spread of 110 bps over Treasuries.

The company’s 4.45% notes due Feb. 1, 2047 also were steady on Monday at 185 bps bid.

The Cincinnati-based grocery retailer sold $1 billion of the bonds on Jan. 17 at a spread of 150 bps over Treasuries.

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