By Cristal Cody
Tupelo, Miss., April 6 – The investment-grade bond market stayed fairly quiet on Friday with light supply expected in the week ahead.
“We’re calling for $12 [billion] to $17 billion next week,” one syndicate source said.
More than $24 billion of investment-grade bonds were priced during the past week, coming in line with syndicate forecasts of about $20 billion to $25 billion of volume.
Several issuers are underway with roadshow plans.
Ausgrid Finance Pty Ltd. kicked off a roadshow on Friday for a benchmark-sized note offering of five-year and/or 10-year senior notes.
Coming up on Monday, Syngenta AG will start a roadshow for a benchmark-sized multi-tranche senior note offering.
Weaker March jobs data dominated market attention at the start of the day and stocks ended weaker on growing China trade war fears. The U.S. Department of Labor reported 103,000 jobs were added during the month, less than the 185,000 forecasted. The unemployment rate was unchanged at 4.1% but above the 4% level market analysts had expected.
The Markit CDX North American Investment Grade 30 index eased about 2 basis points over the day to end at a spread of 65 bps.
Thin investment-grade volume in Canada also is expected for the week ahead.
“We’ll know better when the equities market opens up, but it’s certainly a market where you need to react quickly when a window opens,” a syndicate source said. “You really need to have a frequent issuer to get a deal done.”
Looking at the secondary market, new bonds priced during the week were mostly stronger.
Dollar Tree Inc.’s senior notes (Baa3/BBB-/) priced on Thursday tightened, with the seven-year notes trading about 10 bps better on Friday.
Retail competitor Dollar General Corp.’s 4.125% senior notes due May 1, 2028 priced in late March traded about 1 bp tighter on the day and 2 bps better than their issue level.
Also on Friday, General Mills, Inc.’s senior notes (Baa2/BBB/) priced on Tuesday were mixed but mostly better than issue. The company’s 4.2% notes due April 17, 2028 traded 2 bps softer during the session but remain more than 10 bps tighter than where the issue priced.
Dollar Tree tightens
Dollar Tree’s 4% notes due May 15, 2025 tightened to 115 bps bid in the secondary market, according to a source on Friday.
The company sold $1 billion of the seven-year notes on Thursday at a Treasuries plus 125 bps spread.
Dollar Tree’s $1.25 billion of 4.2% notes due May 15, 2028, priced at a spread of 140 bps over Treasuries, firmed to 138 bps bid in secondary trading on Friday.
Dollar Tree is a Chesapeake, Va.-based discount retailer.
Dollar General firms
Dollar General’s 4.125% senior notes due May 1, 2028 traded about 1 bp better on Friday at 128 bps bid, according to a market source.
Dollar General sold $500 million of the notes (Baa2/BBB/) on March 26 at a spread of 130 bps over Treasuries.
The discount retailer is based in Goodlettsville, Tenn.
General Mills eases
General Mills’ 4.2% notes due April 17, 2028 were quoted in secondary trading on Friday 2 bps softer at 132 bps bid, according to a market source.
General Mills sold $1.4 billion of the 10-year notes as part of a $6.05 billion eight tranche deal on Tuesday at a 145 bps over Treasuries spread.
The maker of consumer food products is based in Minneapolis.
High-grade inflows rise
| Elsewhere, U.S. fund and ETF flows “improved across the board | during | the week ending | April 4th,” Yunyi Zhang, an analyst with BofA Merrill Lynch, said in a note released on Friday.
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| High-grade inflows were $1.71 billion following an outflow of $110 million in the previous week, Zhang said, citing data from EPFR Global and BofA Merrill Lynch Global Research.
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| The rise was driven by a big increase in ETF inflows to $1.55 billion from $20 million, while fund flows also turned positive to $16 million from a $31 million outflow in the previous week.
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| Short-term high-grade had an inflow of $91 million after a $34 million outflow in the prior week. Inflows to high grade outside-of-short-term rose to $80 million from $23 million for the week ended Wednesday, according to the note.
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| All of the fixed income categories, including global emerging markets and high yield, had the “third strongest weekly inflow year-to-date” at $5.42 billion from $57 million a week earlier, Zhang said.
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