Pershing Square, Sterling Bancorp, Kommunalbanken, Inter-American Bank price; spreads widen

By Cristal Cody

Tupelo, Miss., Oct. 28 – The high-grade bond market continued to see supply over Wednesday’s session despite pressure in the financial markets on the growing Covid-19 caseload.

Pershing Square Holdings, Ltd. (/BBB+/BBB) sold $500 million of 3.25% 10-year senior notes, tighter than talk in the 3.5% area.

Sterling Bancorp priced $225 million of 10-year fixed-to-floating-rate subordinated notes (Kroll: BBB) in an offering upsized from $200 million at the launch.

In sovereign, supranational and agency issuance over Wednesday’s session, Kommunalbanken Norway (Aaa/AAA/) sold $750 million of two-year notes in a deal upsized from $500 million.

The Inter-American Development Bank (Aaa/AAA/) also priced $500 million of floating-rate global notes due Feb. 4, 2025 on Wednesday.

About $10 billion of investment-grade issues have priced week to date.

The high-grade market saw heavier supply on Tuesday with more than $8 billion of corporate and SSA volume following one preferred stock deal on Monday.

About $15 billion of investment-grade issuance is anticipated this week, according to syndicate sources.

Total non-financial investment-grade issuance for the year already totals $1.2 trillion, 15% higher than the previous annual record set in 2017, according to an S&P Global Ratings report.

“The extent to which issuers have fully tapped the market remains to be seen, though we estimate that much of the debt issued thus far in 2020 is being stored as cash, particularly for investment-grade companies in the U.S. and Europe,” S&P said. “Still, financing conditions and market appetite remain quite favorable, allowing some issuers to address their full debt structure by issuing new debt at longer maturities and lower coupons to pre-pay existing obligations. We estimate there are several large issuers that have yet to come to market in 2020.”

Credit spreads ease

The financial markets remained under pressure on Wednesday as the number of Covid-19 infections rises in the United States and Europe.

Credit spreads eased more than 4 basis points over the day.

The Markit CDX North American Investment Grade 35 index softened 4.11 bps to a spread of 63.93 bps.

The Dow Jones industrial average closed the day down 3.43%, the S&P 500 dropped 3.53% and the Nasdaq declined 3.73%.

The PIMCO Investment Grade Corporate Bond index softened 0.44% to $114.86 over the session.

The iShares iBoxx Investment Grade Corporate Bond ETF fell 0.49% to $134.78.

© 2015 Prospect News.
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