Front-loaded high-grade supply eyed ahead of Fed meeting; Westpac flat; TD Bank, Adobe firm

By Cristal Cody

Tupelo, Miss., Jan. 24 – The dollar-denominated investment-grade primary market stayed quiet over Friday’s session following about $19 billion of issuance over the week.

Supply is expected to remain steady in the week ahead with volume likely front-loaded ahead of the Federal Reserve’s two-day monetary policy meeting that ends Wednesday, market sources report.

About $20 billion to $25 billion of high-grade issuance is forecast, syndicate sources said.

In other market action expected in the upcoming week, Japan Finance Organization for Municipalities (A1/A+/) will start a roadshow on Monday for a dual currency bond deal.

The transaction is expected to include a Rule 144A and Regulation S offering of dollar-denominated green bonds and a debut offering of euro-denominated notes.

In pricing action seen Friday, renewable energy provider Hydro-Quebec priced a C$500 million add-on to its 4% debentures due Feb. 15, 2055 at 141.175, plus accrued interest from Aug. 15, 2019, to yield 2.286% in the 11th tranche of the issue.

The Markit CDX North American Investment Grade 33 index ended Friday nearly 1 basis point wider at a spread of 46.7 bps.

In the secondary market, bank and financial paper priced this week was mixed, sources said.

Westpac Banking Corp.’s $1.5 billion of 2.894% subordinated notes due Feb. 4, 2030 traded flat on the bid side.

Toronto-Dominion Bank’s $1 billion of floating-rate senior medium-term notes due Jan. 27, 2023 brought to the primary market on Wednesday tightened 3 bps.

In other new issue trading, Adobe Inc.’s $3.15 billion of notes (A2/A/) priced in four tranches in the week’s biggest deal tightened about 1 bp to 2 bps.

Elsewhere in the secondary market, Charter Communications, Inc.’s 4.8% senior secured notes due March 1, 2050 that were reopened in December softened about 10 bps on Friday in active trading.

Steel Dynamics, Inc.’s 3.45% notes due April 15, 2030 improved modestly in light volume over the day.

Meanwhile, inflows for high-grade corporate bonds, agencies, Treasuries and mortgages slowed this past week ended Wednesday to $3.99 billion from $5.77 billion, Yuri Seliger, credit strategist with BofA Securities, Inc., said in a global research note released on Friday.

Short-term flows “turned negative” with a $540 million outflow following a $1.25 billion inflow in the prior week, while excluding short-term high-grade inflows rose slightly to $4.53 billion from $4.52 billion a week earlier.

Inflows to high-grade ETFs fell to $110 million from $2.87 billion in the previous week, though flows to funds climbed to $3.89 billion this past week from $2.9 billion, Seliger said.

Westpac unchanged

Westpac Banking’s 2.894% subordinated notes due Feb. 4, 2030 (A3/BBB+/A+) were quoted at 135 bps bid, 132 bps offered in the secondary market on Friday, a source said.

The bank sold $1.5 billion of the notes on Thursday at a spread of Treasuries plus 135 bps.

Initial price talk was in the Treasuries plus low 150 bps area.

The notes will be reset Feb. 4, 2025 to but excluding the the maturity to a fixed rate of Treasuries plus 135 bps.

The bank is based in Sydney, Australia.

TD Bank firms

Toronto-Dominion Bank’s floating-rate senior medium-term notes due Jan. 27, 2023 (Aa3/AA-/AA-) traded Friday at SOFR plus 45 bps bid, SOFR plus 43 bps offered, a market source said.

The bank priced $1 billion of the notes on Wednesday at SOFR plus 48 bps.

Initial talk was in the SOFR plus low 60 bps area.

The bank and financial services company is based in Toronto.

Adobe tightens

Adobe’s 2.3% notes due Feb. 1, 2030 were seen in secondary trading at 56 bps bid, 53 bps offered, according to a market source.

The company sold $1.3 billion of the 10-year notes on Wednesday at a Treasuries plus 57 bps spread. Initial guidance was in the 80 bps over Treasuries area.

Adobe is a San Jose, Calif., computer software and services provider for businesses.

Charter notes ease

Charter Communications’ 4.8% senior secured notes due March 1, 2050 (Ba1/BBB-/BBB-) were quoted with a 107 handle and at the 227 bps bid area on Friday, about 10 bps softer on the day, according to market sources.

Charter reopened the notes on Dec. 2 in a $1.3 billion add-on at 101.964 to yield 4.677% and a spread of Treasuries plus 240 bps.

Charter originally sold the notes in a $1.5 billion offering on Oct. 15 at 99.436 to yield 4.836% and a spread of Treasuries plus 260 bps. The total outstanding is $2.8 billion.

The notes were issued through subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.

The broadband communications company is based in Stamford, Conn.

Steel Dynamics improves

Steel Dynamics’ 3.45% senior notes due April 15, 2030 (Baa3/BBB-/BBB) traded modestly better on the day at 102.875, a market source said.

Steel Dynamics sold $600 million of the notes on Dec. 9 at 99.736 to yield 3.481% and a Treasuries plus 165 bps spread.

The steel producer and metals recycler is based in Fort Wayne, Ind.

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