Morning Commentary: FedEx plans $690 million offering; Alexandria Real Estate on deck

By Cristal Cody

Tupelo, Miss., July 29 – A couple of investment-grade issuers offered new securities at the start of Wednesday’s session ahead of the Federal Reserve’s end of its July monetary policy meeting.

FedEx Corp. is offering $690 million of class AA pass-through certificates with a 13.4-year maturity and an 8.8-year weighted average life (expected ratings Aa3/AA-) on Wednesday.

Alexandria Real Estate Equities, Inc. plans to sell new fixed-rate guaranteed senior notes (Baa1/BBB+).

Deal volume week to date already has beaten market forecasts with more than $19 billion of securities sold over the first two sessions, led by AT&T Inc.’s $11 billion five-part offering of senior global notes (Baa2/BBB/A-) on Monday.

About $10 billion to $15 billion of investment-grade issuance was expected this week.

Reliance Steel tightens

New issues were mostly improved in secondary trading, a market source said.

Reliance Steel & Aluminum Co.’s upsized $900 million two-part offering of senior notes (Baa3/BBB/BBB) that priced on Tuesday tightened about 10 basis points to 11 bps.

The $400 million tranche of 1.3% notes due Aug. 15, 2025 came in to 99 bps bid.

The notes priced at a spread of Treasuries plus 110 bps, compared to initial price talk in the Treasuries plus 145 bps area.

Reliance Steel’s $500 million tranche of 2.15% notes due Aug. 15, 2030 firmed about 10 bps.

The 10-year notes priced with a spread of 160 bps over Treasuries versus talk in the 200 bps area.

The deal was upsized from an expected $800 million offering.

AT&T’s new notes were mixed in the secondary market.

A $2.25 billion tranche of 1.65% notes due Feb. 1, 2028, which priced at a spread of Treasuries plus 120 bps, firmed about 7 bps.

Initial price talk was in the Treasuries plus 150 bps area.

The company’s 3.1% notes due Feb. 1, 2043 softened about 1 bp.

AT&T sold $2.5 billion of the notes at a 185 bps over Treasuries spread.

Initial price guidance was in the 205 bps spread area.

Secondary market volume was strong on Tuesday with $21.85 billion of high-grade corporate bonds traded, up from $16.86 billion on Monday, according to Trace data.

Market tone was positive at the start of Wednesday’s session.

The Pimco Investment Grade Corporate Bond index improved 29 cents to 116.69.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 16 cents to 137.72.

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