Morning Commentary: Takeda, Sumitomo Mitsui, AEP, Equitable Financial offer notes

By Cristal Cody

Tupelo, Miss., June 29 – Several companies intend to tap the high-grade primary market on Monday, while overall deal volume is expected to be lighter for the holiday-shortened week, sources said.

Takeda Pharmaceutical Co., Ltd. (Baa2/BBB+) plans to price its four-part offering registered dollar-denominated senior notes on Monday after marketing the deal on Thursday and Friday.

The offering includes 10-year notes with initial price talk in the Treasuries plus 175 basis points area, 20-year notes talked at the 195 bps spread area, 30-year notes talked at the 210 bps spread area and 40-year notes talked to price at the 230 bps over Treasuries area.

Sumitomo Mitsui Financial Group Inc. is marketing two tranches of registered dollar-denominated senior fixed-rate notes (A1/A-) during the session. Initial price talk on a five-year tranche is in the Treasuries plus 145 bps area, while a 10-year tranche is talked at the 175 bps spread area.

AEP Texas Inc. also is offering $500 million of registered 10-year fixed-rate senior notes (Baa1/A-) on Monday. The notes are talked to price at the Treasuries plus 162.5 bps spread area.

In addition, Equitable Holdings, Inc. subsidiary Equitable Financial Life Insurance Co. (A2/A+) intends to price five-year notes on Monday. Initial price talk is in the 137.5 bps over Treasuries area.

About $10 billion to $15 billion of issuance is expected by market participants this week ahead of the Independence Day holiday break.

The financial markets will close early at 2 p.m. ET on Thursday and remain closed on Friday for the holiday.

Last week, high-grade deal volume totaled more than $23 billion.

In the secondary market, Sumitomo Mitsui’s existing paper was mixed, a source said.

The company’s 2.696% notes due Jan. 15, 2025 opened the day at 104.48 after trading at 104.58 on Friday.

Sumitomo Mitsui Financial sold $2 billion of the notes in its last offering on Jan. 6 at par to yield a spread of Treasuries plus 85 bps.

The company’s 3.04% notes due Jan. 15, 2030 were not active over the morning and were last seen on Friday at 106.08.

Sumitomo Mitsui sold $2 billion of the 10-year notes in the January offering at par to yield a Treasuries plus 100 bps spread.

AEP Texas’ 3.45% senior notes due Jan. 15, 2050 that priced in its most recent offering on Dec. 3, 2019 were last seen in secondary trading on Friday at 108.02.

The company sold $450 million of the notes at 99.532 to yield 3.475%, or a spread of 130 bps over Treasuries.

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