Morning Commentary: Hewlett Packard offers two tranches; UDR plans issue; JBIC on deck

By Cristal Cody

Tupelo, Miss., July 14 – High-grade corporate and sovereign, supranational and agency supply is expected to print over Tuesday’s session, sources report.

Hewlett Packard Enterprise Co. is marketing two tranches of senior notes (Baa2/BBB/BBB+) with proceeds to be used to redeem $3 billion of its 3.6% notes due Oct. 15.

UDR, Inc. is offering guaranteed medium-term notes (Baa1/BBB+) to fund a tender offer for $300 million of 3.75% notes due July 1, 2024 and to repay other outstanding debt, among other general corporate purposes.

In SSA primary action, Japan International Cooperation Agency is expected to bring $500 million of 10-year registered guaranteed bonds to the primary market on Tuesday in a no-grow offering, a source said.

Initial price talk is in the mid-swaps plus 50 basis points area.

On Monday, $5.5 billion of investment-grade notes were priced from Mars Inc. and Mitsubishi UFJ Financial Group, Inc.

About $15 billion to $20 billion of issuance is expected by market participants this week. Market focus is on bank and financial earnings reports due over the week, with Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo & Co. releasing second quarter results on Tuesday.

Goldman Sachs will release its profit results on Wednesday, followed by Bank of America and Morgan Stanley on Thursday.

Mars notes firm

In the secondary market, Mars’ $2.5 billion of guaranteed senior notes (A1/A) priced in four tranches improved about 2 bps to 3 bps, a source said.

The company’s 0.875% notes due July 16, 2026 firmed about 3 bps.

Mars sold $500 million of the notes at a spread of 60 bps over Treasuries.

Initial price talk was in the Treasuries plus 95 bps area.

The company’s 2.45% notes due July 16, 2050 traded about 2 bps tighter.

Mars priced $400 million of the 30-year notes at a Treasuries plus 115 bps spread.

Initial price guidance was at the 140 bps over Treasuries area.

The notes are guaranteed by Wm. Wrigley Jr. Co. and New Uno Holdings Corp.

Secondary market volume on Monday included $16.97 billion of corporate issues traded, according to Trace data.

High-grade market tone improved early Tuesday after ending Monday softer.

The iShares iBoxx Investment Grade Corporate Bond ETF was up 0.35% at 135.98 following a 0.26% decline in the prior session.

The Pimco Investment Grade Corporate Bond Index rose 0.32% to 115.42 after ending Monday down 0.24%.

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