Morning Commentary: Westpac, Burlington Northern, CIBC on deck; financial supply eyed

By Cristal Cody

Tupelo, Miss., July 15 – The investment-grade market geared up on Monday for what is expected to be a strong week of bond supply.

At the start of the session, Westpac Banking Corp. marketed fixed-rate subordinated notes due 2034 and 2039.

Burlington Northern Santa Fe, LLC is on deck with an offering of fixed-rate debentures.

In addition, Canadian Imperial Bank of Commerce plans to price dollar-denominated fixed-to-floating rate senior notes due 2023.

About $25 billion to $30 billion of supply, led by bank and financial issuers, is predicted by market sources this week.

Citigroup Inc. kicked off the end of the financial earnings blackout reporting period with the release of its second-quarter earnings report before the market opened on Monday.

On Tuesday, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co. release their profit results, while Bank of America Corp. releases its earnings on Wednesday, followed by Morgan Stanley on Thursday.

Otherwise, supply in other sectors “should be relatively light” with non-financial corporate issuers in earnings blackout reporting periods, according to a BofA research note released on Monday.

The week typically has seen a historical average of $27 billion of deal volume, based on seasonality patterns, the note said.

Volume was heavy last week with investment-grade issuers pricing more than $32 billion of bonds, compared to syndicate forecasts of about $15 billion to $20 billion of volume.

Yankee bond issuance jumped to $28 billion last week, the highest since the first week of January 2017, and included nearly $17 billion of supply from Japanese issuers, according to the BofA note.

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