Morning Commentary: Kimberly-Clark, Rogers Communications on deck; Aqua America eyed

By Cristal Cody

Tupelo, Miss., April 23 – Investment-grade supply is expected to ramp up on Tuesday with several bond offerings taking shape.

Kimberly-Clark Corp. plans to price 10-year notes.

Canada’s Rogers Communications Inc. intends to tap the dollar-denominated primary market with 30-year senior notes.

In addition, Regions Financial Corp. plans to sell $300 million of $25-par fixed-to-floating rate non-cumulative perpetual preferred shares.

In other activity, several companies, including Cantor Fitzgerald and Aqua America Inc., are holding fixed income investor calls this week for possible deals, a market source said.

On Thursday, water utility Aqua America announced it had priced $1 billion of common stock and $585.8 million of tangible equity units to in part fund the $4.28 billion cash and debt acquisition of Peoples Natural Gas that was first announced in October.

“Aqua intends to use the net proceeds from these offerings, together with the net proceeds from future debt financings, which may include the issuance of debt securities and/or borrowings under its bridge facility, and proceeds from a private placement of common stock,” to fund the acquisition and complete the redemption of approximately $314 million of certain Aqua outstanding notes, according to a news release.

The publicly traded water utility will hold its first-quarter earnings call on May 3. Following the merger expected to be completed in mid-2019, the combined company’s corporate headquarters will be in Bryn Mawr, Pa.

On Monday, the only offering in the high-grade market was a $450 million preferred deal from KeyCorp.

About $15 billion to $25 billion of supply this week is expected on average from market sources.

Overall market activity was light at the start of Tuesday’s session following the quiet session on Monday and long holiday weekend, a source said.

Secondary market volume also was thin on Monday with $14 billion of high-grade corporate bonds traded, compared to $17.3 billion in the same period a week ago, according to Trace data.

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