Morning Commentary: Valero Energy, Societe Generale, BNG Bank on tap; RBS, Webster ease

By Cristal Cody

Tupelo, Miss., March 21 – High-grade bond supply from several issuers is expected over Thursday’s session.

Valero Energy Corp. is on deck with an offering of 10-year senior notes.

Also, Societe Generale announced plans for a dollar-denominated note offering.

BNG Bank NV is expected to price a $250 million tap of its senior floating-rate notes due March 11, 2022 on Thursday.

Initial price talk was in the Libor plus 5 basis points area.

The issue was originally priced in a $500 million offering on April 5, 2018 at Libor plus 7 bps. The total outstanding is $1.26 billion.

Investment-grade issuers have priced more than $13 billion of bonds week to date.

About $20 billion to $25 billion of supply was expected by syndicate sources for the week.

The Federal Reserve’s decision on Wednesday to keep rates flat for the remainder of the year was a dovish surprise, according to market sources.

In the secondary market, investment-grade issues were mixed following the Fed rate decision.

Royal Bank of Scotland Group plc’s $2 billion of 4.269% fixed-to-floating rate senior notes due March 22, 2025 (Baa2/BBB-/A) softened about 3 bps to the 183 bps area, a market source said.

The notes were priced on Tuesday at par to yield a spread of 185 bps over Treasuries. The issue has a fixed rate until June 22, 2024 and then will reset to a floating rate of Libor plus 176.2 bps to but excluding the maturity.

Webster Financial Corp.’s $300 million of 4.1% senior notes due March 25, 2029 (Baa1/BBB) traded about 2 bps wider than where the notes priced on Wednesday at a spread of 160 bps over Treasuries, according to a market source.

Secondary market volume has increased over the week with $24.29 billion of bonds traded on Wednesday, up from $23.22 billion on Tuesday and $19.1 billion on Monday, according to Trace.

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