High-grade quiets; light supply eyed on rate decision; Barclays steady, Vodafone, Fiserv ease

By Cristal Cody

Tupelo, Miss., June 14 – The primary market remained quiet on Friday after a week of heavy investment-grade issuance.

More than $28 billion of corporate bonds were sold over the week, beating market expectations of about $20 billion to $25 billion of deal volume.

In addition to the corporate supply, sovereign, supranational and agency issuers priced nearly $10 billion of bonds this week.

Volume has been heavy over the past two weeks with the first week of June seeing more than $24 billion of issuance, compared to market forecasts of about $10 billion to $15 billion of issuance.

Supply is expected to thin in the week ahead with the Federal Reserve’s monetary policy decision due on Wednesday, sources said.

About $15 billion to $20 billion of investment-grade corporate issuance is forecast.

The Markit CDX North American Investment Grade 32 index finished the day about 1 basis point softer at a spread of 61 bps.

Bond purchases remained strong for the week ended Wednesday, sources report.

Overall inflows remained robust at $9.82 billion, down slightly from an $11.93 billion inflow in the previous week, Yuri Seliger, a credit strategist with BofA Merrill Lynch, said in a research note released on Friday.

“Lower inflows to high-grade and government bonds were partly offset by stronger flows for high-yield and leveraged loans,” he said.

Inflows to the high-grade space, including corporate bonds, agencies, mortgages and Treasuries, were down slightly at $4.91 billion for the week from $5.76 billion of inflows a week ago.

The “decline was entirely due to short-term high grade,” Seliger said.

Short-term high-grade inflows fell to $1.31 billion from $2.25 billion in the previous week.

Meanwhile, excluding short-term inflows rose to $3.6 billion from $3.51 billion.

Inflows to high-grade funds declined to $1.66 billion from $3.18 billion, while inflows to ETFs increased to $3.25 billion from $2.58 billion, according to the report.

As previously reported, inflows improved in corporate investment-grade funds to $4.02 billion for the week ended Wednesday from $924 million in the previous week, according to Lipper US Fund Flows.

In the secondary market, new corporate issues priced this week were mixed, sources said.

Barclays plc’s 5.088% fixed-to-floating-rate subordinated notes due June 20, 2030 priced in the previous session traded wrapped around issuance on the bid side.

Vodafone Group plc’s $2.25 billion of notes (Baa2/BBB+/BBB+) priced in two tranches on Wednesday softened about 1 bp to 5 bps.

Fiserv, Inc.’s $9 billion of senior notes (Baa2/BBB/) priced in four tranches at the start of the week traded about 1 bp to 6 bps weaker than issuance.

In other secondary trading, notes from AT&T Inc. were flat to about 12 bps tighter on the day, a source said.

AT&T’s 4.5% notes due March 1, 2029 firmed 4 bps during the session.

Verizon Communications Inc.’s notes were mixed. The company’s 3.875% green senior notes due Feb. 8, 2029 traded 4 bps better on the day.

Barclays mostly flat

Barclays’ 5.088% fixed-to-floating-rate subordinated notes due June 20, 2030 (Ba1/BB+/A-) were quoted in the secondary market on Friday at 300 bps bid, 292 bps offered, according to a market source.

Barclays sold $1 billion of the notes on Thursday at par to yield a spread of 300 bps over Treasuries

The notes will convert Sept. 20, 2029 to a floating rate of Libor plus 305.4 bps.

The financial services company is based in London.

Vodafone softens

Vodafone’s 4.875% notes due June 19, 2049 traded on Friday at 239 bps bid, 235 bps offered, a market source said.

The company sold $1.75 billion of the notes on Wednesday at a spread of 237.5 bps over Treasuries.

Vodafone’s $500 million tranche of 5.125% notes due June 19, 2059 softened to 265 bps bid, 260 bps offered.

The notes priced at a Treasuries plus 260 bps spread.

Vodafone is a London-based telecommunications company.

Fiserv notes ease

Fiserv’s 2.75% notes due July 1, 2024 softened in the secondary market to 94 bps bid, 90 bps offered, a source said.

The $2 billion tranche of five-year notes priced on Monday at a spread of 87.5 bps over Treasuries.

Fiserv’s 3.5% notes due July 1, 2029 traded on Friday at 139 bps bid, 135 bps offered.

The company sold $3 billion of the 10-year notes in Monday’s offering at a Treasuries plus 137.5 bps spread.

The provider of financial services technology is based in Brookfield, Wis.

AT&T improves

AT&T’s 4.5% notes due March 1, 2029 tightened 4 bps to the benchmark over the session to head out in late afternoon trading at 154 bps bid on Friday, a market source said.

The company sold $3 billion of the 10-year notes on Feb. 13 at a spread of Treasuries plus 170 bps.

AT&T is a Dallas-based telecommunications company.

Verizon firms

Verizon Communications’ 3.875% green senior notes due Feb. 8, 2029 improved 4 bps to the benchmark to 109 bps bid in secondary trading on Friday, a source said.

Verizon sold $1 billion of the notes (Baa1/BBB+/A-) on Feb. 5 at a spread of Treasuries plus 120 bps.

Verizon is a New York City-based telecommunications company.

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