IADB sells floaters; week’s supply tops $36 billion; recent Charter bonds tighter in secondary

By Aleesia Forni

Virginia Beach, July 10 – Inter-American Development Bank priced an offering of floating-rate notes to end a volatile week on a strong note on Friday.

The session’s tone turned positive following news that Greece had submitted a reform proposal in order to avoid financial collapse.

More than $36 billion of new issuance hit the primary this week, due largely to Charter Communications Inc.’s $15.5 billion acquisition financing.

The busy week follows what had been a drought for the investment-grade primary, which had been void of any new issues since June 26.

Meantime, Lipper reported $1.09 billion of inflows into corporate investment-grade funds for the week ended July 8, pushing the year-to-date total to $29.9 billion of inflows.

This figure follows the previous week’s $655 million of outflows.

Looking forward, sources are expecting the market’s momentum to carry into the week ahead, with around $25 billion to $30 billion of supply forecasted.

In the secondary, credit spreads reversed the week’s trend to close the session tighter.

The Markit CDX North American Investment Grade series 23 index firmed 4 basis points to a spread of 68 bps.

Tranches of Charter’s megadeal were trading better in the aftermarket.

Bank and financial paper, meanwhile, was mostly unchanged on the day.

Bank of America Corp.’s 4% notes firmed 1 bp, while Morgan Stanley’s 3.875% notes were 4 bps tighter.

IADB floaters

In the day’s only primary action, Inter-American Development Bank priced $500 million of floating-rate global notes (Aaa/AAA/) due Oct. 15, 2019 at par to yield Libor flat, according to a market source.

The notes sold on top of talk.

Deutsche Bank Securities Inc. and TD Securities were the bookrunners.

The issuer provides financing for Latin American and Caribbean countries and is based in Washington, D.C.

Charter notes firm

Tranches of Charter’s $15.5 billion six-tranche offering were trading between 3 bps to 20 bps tighter in the aftermarket, according to a market source.

The company’s $2 billion of 3.579% five-year notes was quoted 3 bps better at 187 bps bid, 185 bps offered.

The notes sold at Treasuries plus 200 bps on Thursday.

Its $3 billion of 4.464% seven-year notes, which sold at Treasuries plus 245 bps, was 7 bps better at 238 bps bid, 236 bps offered.

The $4.5 billion of 4.908% 10-year notes traded at 245 bps bid, 251 bps offered, 6 bps tighter compared to its new issue spread at Treasuries plus 260 bps.

A $2 billion tranche of 6.384% 20-year notes firmed 13 bps to 312 bps bid, 309 bps offered.

The tranche sold at Treasuries plus 325 bps.

Its $3.5 billion tranche of 6.484% 30-year, which sold at Treasuries plus 335 bps, firmed 11 bps to 324 bps bid, 320 bps offered.

Finally, the $500 million of 6.834% 40-year notes was 20 bps tighter at 350 bps bid, 346 bps offered.

The tranche sold at Treasuries plus 370 bps.

Proceeds from the offering will be used to help fund the company’s acquisition of Time Warner Cable Inc.

Charter is a Stamford, Conn.-based provider of cable, internet and phone service.

Bank of America firms

Bank of America’s 4% notes due 2024 firmed 1 bp to 203 bps offered, a market source said.

The issue (Baa2/A-/A) priced in a $2.75 billion offering on March 27 at a spread of Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

Morgan Stanley improves

Morgan Stanley’s 3.875% notes due 2024 firmed 4 bps to 146 bps offered from 146 bps offered, a market source said.

Morgan Stanley sold $3 billion of the notes (Baa2/A-/A-) at Treasuries plus 130 bps on April 23.

The financial services company is based in New York City.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices were lower on Friday, according to a market source.

Bank of America’s CDS costs declined 2 bps to 69 bps bid, 74 bps offered. Citigroup Inc.’s CDS costs were 2 bps lower at 80 bps bid, 87 bps offered. JPMorgan Chase & Co.’s CDS costs were also 2 bps lower at 67 bps bid, 72 bps offered. Wells Fargo & Co.’s CDS costs were down 1 bp to 50 bps bid, 55 bps offered.

Merrill Lynch’s CDS costs were 2 bps lower at 73 bps bid, 75 bps offered. Morgan Stanley’s CDS costs ended 2 bps lower at 80 bps bid, 85 bps offered. Goldman Sachs Group, Inc.’s CDS costs were down 2 bps at 87 bps bid, 92 bps offered.

Paul Deckelman contributed to this review.

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