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Morning Commentary: Fairfax, International Development signal deal plans; CVS notes soften
By Cristal Cody
Tupelo, Miss., April 12 – Investment-grade deal action remains light early Thursday, but several issuers are offering bonds.
Fairfax Financial Holdings Ltd. was underway Thursday morning marketing a Rule 144A and Regulation S offering of senior notes to price soon.
Also, the International Development Association (Aaa/AAA) plans an inaugural bond offering in the near-term horizon.
New issuance also is expected to follow roadshows being held by Syngenta AG and Ausgrid Finance Pty Ltd.
Supply has been thin over the week with less than $7 billion of reported high-grade bonds priced. Syndicate sources forecast about $10 billion to as much as $17 billion of volume for the week.
Market sources were focused on upcoming bank and financial earnings releases. On Friday, Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. post first-quarter earnings reports.
In the high-grade secondary market, trading volume fell to $17.73 billion on Wednesday, according to Trace. Secondary market volume totaled $19.19 billion on Tuesday and $14.67 billion on Monday.
CVS Health Corp.’s senior notes (Baa1/BBB+) that priced in a $40 billion nine-tranche transaction on March 6 to fund its acquisition of Aetna Inc. remain active in the secondary market. The notes traded mostly softer at the start of the session, a source said.
CVS Health’s 4.3% notes due March 25, 2028 traded over the morning at 100.81. The notes went out on Wednesday in the secondary market at 100.99.
The 10-year notes were sold in a $9 billion tranche at 98.594 to yield 4.475%, or a spread of Treasuries plus 160 basis points.
The company’s 5.05% notes due March 25, 2048 opened softer at 105.68 from 106.07 on Wednesday.
The Woonsocket, R.I.-based retail pharmacy chain and pharmacy benefits manager sold $8 billion of the bonds at 99.43 to yield 5.087%, or a Treasuries plus 195 bps spread.
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