Morning Commentary: Deals from Magellan Midstream, Danske Bank eyed ahead of weekend

By Cristal Cody

Tupelo, Miss., Jan. 11 – Some investment-grade issuance is expected over Friday’s session to cap off an already strong week of volume.

Magellan Midstream Partners, LP is offering $500 million of 30-year senior notes.

An offering announced on Thursday of series L medium-term notes due Jan. 15, 2049 from Washington Gas Light Co. remains in the deal pipeline.

In addition, Danske Bank A/S is expected to bring a two-part offering of senior notes on Friday after the deal was postponed on Wednesday.

About $37 billion of corporate bonds were brought to the primary market in the first four sessions of the week. Syndicate sources had expected about $25 billion to $30 billion of new issuance for the week.

Supply this week has been led by Anheuser-Busch InBev Worldwide Inc.’s $15.5 billion six-part sale of fixed-rate notes on Thursday.

Looking at the investment-grade secondary market, trading volume also has been solid week to date. On Thursday, $23.52 billion of bonds were traded, compared to $23.90 billion on Wednesday, $21.81 billion on Tuesday and $20.98 billion on Monday, according to Trace.

Bond flows in focus

Meanwhile, this week has seen an overall $7.09 billion inflow to bonds, up from a $2.24 billion outflow in the prior week and the largest inflow since January 2017, Yuri Seliger, a credit strategist with BofA Merrill Lynch, said in a note released on Friday.

“Flows to fixed income were stronger for all major sectors with the exception of government bonds, where inflows instead declined following elevated buying earlier,” Seliger said.

In the high-grade space, which includes corporates, agencies, Treasuries and mortgages, a $1.8 billion inflow to ETFs was partially offset by a $1.54 billion outflow from funds for a net inflow of $260 million, up from a $4.35 billion outflow a week earlier, according to the note.

“Notably the strong recent inflows to front-end high grade turned negative this past week with a $1.19 [billion] outflow – the first since March of last year – and down from a $140 [million] inflow in the prior week,” Seliger said.

High grade excluding short-term flows turned positive for the week ended Jan. 9 with a $1.45 billion inflow after a $4.5 billion outflow in the previous week.

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