Morning Commentary: Assurant, Sprint to price notes during session; wider concessions dampen supply

By Cristal Cody

Tupelo, Miss., March 14 – At least two bond issuers plan to tap the investment-grade primary market on Wednesday with supply remaining light after heavy volume on Monday, according to market sources.

Assurant, Inc. is marketing three tranches of notes.

Also, the $3.9 billion of wireless spectrum-backed senior secured notes (Baa2//BBB) from Sprint Corp. subsidiaries Sprint Spectrum Co. LLC, Sprint Spectrum Co. II LLC and Sprint Spectrum Co. III LLC are set to price later on Wednesday.

Supply thinned on Tuesday to $1.37 billion following more than $14 billion of investment-grade bonds priced on Monday.

New issues have priced with wider concessions and are trading weaker in the secondary market, putting pressure on supply, according to a BofA Merrill Lynch note released on Wednesday.

“We estimate average new issue concessions widened to 13.8 [basis points] so far this week from 10.9 bps last week and 6.9 bps during the week of February 26,” the note said.

Market sources had expected about $30 billion to $35 billion of deal volume over the week.

Several issuers, including Rio Tinto plc and Valero Energy Partners LP, have been holding roadshows and investor calls ahead of possible deals.

Secondary market volume has been strong with $20.53 billion of high-grade bonds traded on Tuesday, up from $18.53 billion on Monday, according to Trace.

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