Morning Commentary: DuPont, Texas Instruments, PepsiCo in deal pipeline; Great Plains mixed

By Cristal Cody

Tupelo, Miss., April 27 – Primary action was set to pick up in the investment-grade bond market on Thursday.

E.I. DuPont de Nemours & Co. plans to price up to $2 billion of three-year notes in two parts in a deal that was announced on Wednesday.

Also, Texas Instruments Inc. and PepsiCo, Inc. are marketing notes in deals unveiled on Thursday morning.

In the secondary market, Great Plains Energy Inc.’s notes (Baa3/BBB/) priced in March continue to modestly recover in the wake of regulators’ rejection of the company’s $12.2 billion acquisition of Westar Energy Inc.

Kansas regulators on April 19 rejected the deal that would have combined Kansas City, Mo.-based Great Plains Energy and Topeka-based Westar Energy. The deal also requires approval from Missouri and federal regulators.

Great Plains Energy’s notes sold in March carry mandatory calls of 101 if the merger does not close or is delayed.

Secondary market volume has climbed steadily over the week.

High-grade bond secondary market volume hit $20.59 billion on Wednesday, compared to $19.94 billion on Tuesday and $16.14 billion on Monday, according to Trace.

Great Plains mixed

Great Plains Energy’s 3.9% notes due April 1, 2027 were flat early Thursday after recovering slightly on Wednesday to 101.35 in the secondary market, a source said.

The notes remain down from a high of 104.18 seen on Friday.

Great Plains sold $1.4 billion of the 10-year notes on March 6 at 99.87 to yield 4.858% and a spread of Treasuries plus 145 bps.

The company’s 4.85% bonds due April 1, 2047 rose to 101.68 in secondary trading over the morning from where the notes went out on Wednesday at 101.47.

The notes dropped on April 19 from 104.05 to 101.60 on April 20.

The company sold $1 billion of the 30-year bonds in the March offering at 99.87 to yield 4.858%, or a spread of Treasuries plus 175 bps.

Kansas City, Mo.-based Great Plains is the holding company of Kansas City Power & Light Co. and KCP&L Greater Missouri Operations Co.

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