High-grade volume thins; ‘not a great market’ to price; Export Canada, Airbus in pipeline

By Cristal Cody

Tupelo, Miss., March 27 – U.S. investment-grade issuers stayed out of the primary bond market on Monday, according to informed sources.

One source said as many as 10 issuers stood down over the session, crediting the pullback in the market due to last week’s failure of a health-care replacement bill in Congress and renewed attention on tax reform.

“The Dow was down a hundred points, so it was not a great market for issuance,” a syndicate source said on Monday afternoon. “There could be supply [later in the week] if we see stability in the market.”

About $25 billion to $30 billion of deal volume was forecast by market participants for the week.

Coming up on Tuesday, Export Development Canada is expected to price $500 million of two-year notes.

Also on Tuesday, Airbus Group SE (A2/A+/A-) kicks off fixed income investor meetings with a Rule 144A/Regulation S dollar-denominated offering of senior notes expected to follow. Citigroup Global markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the arrangers.

In other activity on Monday, Hewlett Packard Enterprise Co. announced that subsidiary Everett SpinCo., Inc. closed on a $1.5 billion Rule 144A and Regulation S private placement sale of senior notes.

The Markit CDX North American Investment Grade index eased about 1 basis point on Monday to a spread of 68 basis points.

Export Canada preps notes

Export Development Canada (Aaa/AAA) plans to price $500 million of two-year dollar-denominated notes in a Rule 144A and Regulation S offering on Tuesday, according to a market source.

The notes are due April 4, 2019.

BofA Merrill Lynch and Citigroup are the bookrunners.

Ottawa-based Export Development Canada is a Canadian government-owned export credit agency.

Everett sells $1.5 billion

Everett SpinCo. (Baa2/BBB/BBB+) closed on a $1.5 billion Rule 144A and Regulation S private placement sale of senior notes, according to a news release.

The offering included $500 million of 2.875% notes due 2020, $500 million of 4.25% notes due 2024 and $500 million of 4.75% notes due 2027.

BofA Merrill Lynch, MUFG and RBC Capital Markets, LLC were the bookrunners, according to an 8-K filing with the Securities and Exchange Commission.

The offering was placed to help fund the merger of Everett SpinCo. with Computer Sciences Corp.

Everett SpinCo. plans to use the proceeds to fund a cash payment to Hewlett Packard Enterprise as part of its merger with Falls Church, Va.-based Computer Sciences. Following the merger expected to close on April 1, Everett SpinCo. will be renamed DXC Technology Co.

Everett SpinCo. is a Palo Alto, Calif.-based technology consulting and services company.

Hewlett Packard Enterprise is a technology company based in Palo Alto, Calif.

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