New supply thins; SunTrust Banks, National Australia Bank tap primary market; ERP eyes deal

By Cristal Cody

Tupelo, Miss., July 26 – Primary action stayed light on Wednesday with market attention focused on the Federal Reserve’s release of its latest monetary policy.

SunTrust Banks, Inc. tapped the primary market with a $1 billion offering of five-year fixed-rate notes. The bank dropped a five-year floating-rate tranche from the final sale.

Also, National Australia Bank Ltd. came with $250 million of two-year floating-rate notes.

Looking ahead, a bond deal is expected from ERP Operating, LP following investor calls on Tuesday.

Deal volume week to date totals more than $8 billion. Market sources expected about $20 billion to $25 billion of issuance for the week.

In the secondary market, Whole Foods Market Inc.’s 5.2% notes due Dec. 3, 2025 headed out mostly unchanged but softer on the week following the release of its third quarter earnings results on Wednesday.

Food retailer bonds have been impacted since Amazon.com, Inc. announced in June it will purchase Whole Foods for $13.7 billion in cash.

Whole Foods’ 5.2% notes due 2025 (Baa3/BBB-/) traded on Wednesday at 85 bps bid, about 3 bps softer since Friday, a market source said.

The notes were quoted at 114.50 going out from 114.38 on Tuesday, another market source said.

Austin, Texas-based Whole Foods sold $1 billion of the notes on Nov. 30, 2015 at 99.861 to yield 5.218% and a spread of Treasuries plus 300 basis points.

The Markit CDX North American Investment Grade index closed flat at a spread of 56 bps.

SunTrust sells $1 billion

SunTrust Banks priced $1 billion of 2.45% five-year senior notes (Baa1/BBB+/A-) on Wednesday at a spread of Treasuries plus 67 bps, according to a market source.

The notes were talked to price in the Treasuries plus 70 bps area, plus or minus 3 bps.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and SunTrust Robinson Humphrey Inc. were the bookrunners.

The financial holding company for SunTrust Bank is based in Atlanta.

National Australia Bank prices

National Australia Bank (Aa3/AA-/AA-) sold $250 million of two-year senior floating-rate notes at Libor plus 24 bps on Wednesday, according to a market source.

Wells Fargo Securities LLC was the bookrunner.

National Australia Bank is a financial institution based in Melbourne.

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