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Morning Commentary: Investment-grade bond supply thins; United Airlines, Denmark on tap
By Cristal Cody
Tupelo, Miss., Oct. 20 – Investment-grade bond supply on Tuesday is expected to include new corporate and sovereign, supranational and agency issuance, according to market sources.
United Airlines, Inc. intends to price $3 billion of class A pass-through certificates (A3/A) with a seven-year tenor and a 4.1-year weighted average life.
In other primary action, U.S. Bancorp is offering $25-par preferred shares on Tuesday.
In SSA supply, the Kingdom of Denmark (Aaa/AAA/AAA) is expected to bring dollar-denominated notes due Oct. 27, 2022 in a Rule 144A and Regulation S offering to the market on Tuesday. Initial price talk is in the mid-swaps plus 5 basis points area.
Meanwhile, the Federal Home Loan Bank System announced plans to price a new two-year Global note on Wednesday.
High-grade companies priced $8 billion of bonds on Monday, led by T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc.’s $4.75 billion a Rule 144A and Regulation S four-tranche offering of senior secured notes (Baa3/BBB-/BBB-).
About $15 billion of high-grade supply is expected this week, according to syndicate sources.
Issuance is thinning with the bulk of companies still in earnings-related blackout reporting periods, sources note.
Last week, the major U.S. banks released third-quarter results, while the earnings calendar remains thick this week.
Investment-grade companies scheduled to post earnings reports on Tuesday include W.R. Berkley Corp., Regions Financial Corp., Lockheed Martin Corp., Procter & Gamble Co., Synovus Financial Corp., Texas Instruments Inc. and Philip Morris International Inc.
The high-grade market tone was mixed over the morning.
The Pimco Investment Grade Corporate Bond index improved 0.12% to 115.10 at the start of the day.
The iShares iBoxx Investment Grade Corporate Bond ETF fell 0.11% to $134.93.
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