Morning Commentary: Investment-grade supply heavy; Visa, PPL Capital to price; Visa mixed

By Cristal Cody

Tupelo, Miss., Sept. 6 – The high-grade bond market prepped early Wednesday for a second straight session of heavy supply.

Tuesday’s issuance of more than $22 billion of bonds was the sixth highest volume day of 2017 for investment-grade corporate bonds, a market source said.

As much as $40 billion of supply is forecast for the week, a source said.

On Wednesday, issuers including Visa Inc., PPL Capital Funding, Inc., Arizona Public Service Co., Eaton Corp., National Retail Properties, Inc. and Northern States Power Co. plan to tap the primary market.

In tune with the strong primary activity, secondary market volume ticked up on Tuesday to $12.86 billion, according to Trace. Investment-grade trading volume on Friday totaled $5.34 billion.

Visa’s senior notes (A1/A+) brought to market in 2015 were mostly unchanged at the start of the session.

Visa’s 3.5% notes due 2025 saw a strong burst of trading on Tuesday and went out at 103.27, about 1 cent higher than where the paper last traded on Friday, a source said.

The company sold $4 billion of the notes on Dec. 9, 2015 at 99.63 to yield 3.19% and a spread of Treasuries plus 97 basis points.

Visa’s 4.3% bonds due 2045 softened in early trading to 111.66 from 112.20 on Tuesday in the secondary market.

The San Francisco-based electronic payments network operator sold $3.5 billion of the bonds in the Dec. 9, 2015 offering at 99.83 to yield 4.31%, or a spread of Treasuries plus 132 bps.

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