Morning Commentary: High-grade deal pipeline fills; Verizon slips; Burlington Northern mixed

By Cristal Cody

Tupelo, Miss., March 13 – Several issuers announced plans early Monday to tap the high-grade bond market.

Verizon Communications Inc. plans to price a four-part notes offering.

Humana Inc., Fulton Financial Corp., Virginia Electric and Power Co. and DCT Industrial Operating Partnership LP also are in the deal pipeline.

About $25 billion to $30 billion of new issue volume is forecast for the week with activity expected to be heavier in the first two sessions before the conclusion of the Federal Reserve’s policy meeting on Wednesday, according to market sources.

The Fed is widely expected to raise rates by 25 basis points, sources report.

The three-month Libor yield rose 1 bp to 1.12% on Monday, a source said.

In the secondary market, Verizon Communications Inc.’s existing 2.625% notes due 2026 traded slightly weaker early Monday.

Burlington Northern Santa Fe, LLC’s $1.25 billion two-tranche offering of senior debentures (A3/A/) priced a week ago traded mostly better early Monday.

On Friday, $15.5 billion of investment-grade issues traded, according to Trace.

Verizon softens

Verizon’s 2.625% notes due 2026 softened to 89.00 on Monday from 89.60 on Friday, according to a market source.

Verizon sold $2.25 billion of the notes (Baa1//A-) on July 27 at 99.74 and a spread of Treasuries plus 115 bps.

The telecommunications company is based in New York City.

Burlington Northern better

Burlington Northern Santa Fe’s 3.25% debentures due June 15, 2027 improved to 99.50 in early secondary trading on Monday from where the notes traded flat on Friday at 99.08, a market source said.

The company priced $500 million of the debentures on March 6 at 99.747 to yield 3.278%, or a spread of Treasuries plus 78 bps.

Burlington Northern Santa Fe’s 4.125% debentures due June 15, 2047 traded early Monday at 97.08. The notes were seen on Friday at 97.12.

The company sold $750 million of the debentures in the March 6 offering at 98.857 to yield 4.191% and a Treasuries plus 108 bps spread.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

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