Ontario sells $2.5 billion; lighter holiday deal pace eyed; Morgan Stanley, Fox firm

By Cristal Cody

Tupelo, Miss., Jan. 18 – The Province of Ontario priced $2.5 billion of five-year global notes on Friday as the sole reported issuer in the investment-grade primary market.

The deal brings week-to-date corporate and sovereign, supranational and agency investment-grade bond volume to more than $36 billion. Corporate issuers priced more than $25 billion of notes over the week.

About $30 billion to $40 billion of corporate supply was expected by syndicate sources for the week.

Financial issuance was in the forefront this week with new paper from issuers including Wells Fargo & Co., J.P. Morgan Chase & Co. and Morgan Stanley.

Bank supply also is being eyed in the upcoming short market week, though overall deal volume is expected to be lighter with many companies still in earnings blackout periods. sources said.

Syndicate sources forecast about $20 billion to $25 billion of new issuance in the week ahead.

The U.S. financial markets will be closed on Monday for the Martin Luther King Day holiday.

Experian plc (Baa1/A-) is expected on Monday to start a three-day roadshow and conduct fixed income investor calls in the U.S. and European markets for a dollar-denominated 10-year senior note offering, a source said.

The Markit CDX North American Investment Grade 31 index firmed about 2 basis points over the day to a spread of 73 bps. Credit spreads have tightened about 5 bps on the week.

In the secondary market, new issues priced this week have traded mostly stronger, according to market sources.

Morgan Stanley’s $3 billion of 4.431% global medium-term fixed-to-floating rate senior notes due Jan. 23, 2030 sold Thursday were quoted on Friday afternoon nearly 20 bps tighter.

Fox Corp.’s $6.8 billion five-part offering of notes that priced on Tuesday traded about 5 bps to as much as 25 bps tighter in the secondary market.

Elsewhere, flows improved marginally for the high-grade space over the week ended Jan. 16, according to a BofA Merrill Lynch note released on Friday.

Inflows to high grade, which includes corporates, agencies, Treasuries and mortgages, rose to $57 million from $26 million in the prior week.

Short-term high grade “flipped to the more typical net buying” of $79 million this week from net selling of $1.19 billion a week earlier, BofA Merrill Lynch strategist Yuri Seliger said in the report.

High grade funds had $80 million in inflows after a $1.54 billion outflow in the previous week.

Ontario prices $2.5 billion

Ontario (Aa2/A+/AA-) priced $2.5 billion of 3.05% five-year global notes on Friday at mid-swaps plus 36 bps, or a spread of Treasuries plus 44.9 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes were initially talked to price in the mid-swap plus 38 bps area.

The issue came at 99.899 to yield 3.072%.

BofA Merrill Lynch, HSBC Securities (USA) Inc., BofA Merrill Lynch, Morgan Stanley & Co. LLC, BMO Capital Markets Corp., National Bank of Canada Financial Inc., RBC Capital Markets, LLC, Scotia Capital (USA) Inc. and TD Securities (USA) LLC were the underwriters.

Morgan Stanley tightens

Morgan Stanley’s 4.431% global medium-term fixed-to-floating rate senior notes due Jan. 23, 2030 traded on Friday at 152 bps bid, 149 bps offered in the secondary market, a source said.

The company (A3/BBB+/A) priced $3 billion of the notes on Thursday at par to yield a spread of Treasuries plus 170 bps.

The coupon will reset to a floating rate of Libor plus 162.8 bps from Jan. 23, 2029 to but excluding the maturity date.

Morgan Stanley is a New York-based financial products and services company.

Fox notes firm

Fox’s 4.709% notes due Jan. 25, 2029 have tightened to 177 bps bid, 174 bps offered in secondary trading, a market source said.

The company (Baa2/BBB) sold $2 billion of the 10-year notes on Tuesday at a Treasuries plus 200 bps spread.

The mass media company is based in New York City.

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