High-grade registered primary market quiets; Telus prices; FS KKR Capital considers bond deal

By Cristal Cody

Tupelo, Miss., June 26 – The dollar-denominated high-grade primary market ended Wednesday without any reported registered issuers after credit spreads softened about 3 basis points in the previous session.

Vancouver, B.C.-based telecommunications company Telus Corp. came with C$800 million of 2.75% seven-year senior notes on Wednesday at a spread of 133 basis points over the interpolated Government of Canada bond curve.

The notes (Baa1/BBB+/DBRS: BBB) priced at 99.873 to yield 2.77%.

The lead managers were BMO Nesbitt Burns Inc., CIBC World Markets Inc. and Scotia Capital Inc.

In other action, some dollar-denominated deals are being marketed.

TCF National Bank launched an offering of 10-year fixed-to-floating-rate subordinated bank notes in the previous session.

Commerzbank AG is planning to hold a roadshow for a $500 million minimum offering of tier 1 capital subordinated bonds.

Coming up on Thursday, FS KKR Capital Corp. is scheduled to hold fixed income investor calls for a possible senior note offering.

Meanwhile, a deal from AbbVie Inc. is on the horizon with the market eying about $40 billion of new investment-grade debt to fund its acquisition of Allergan plc.

High-grade issuers have priced nearly $10 billion of bonds week to date.

About $15 billion of issuance is expected by syndicate sources for the week.

Deal volume so far has been led by Enterprise Products Operating LLC’s $2.5 billion two-part offering of guaranteed fixed-rate senior notes that priced on Monday.

Spreads widened on Tuesday, sending new issues priced this week mostly softer, a market source said.

Enterprise Products Operating’s notes had tightened across both tranches in secondary trading but eased on Tuesday by about 4 bps.

The company’s 3.125% notes due July 31, 2029 softened to trade in the 111 bps area.

Enterprise Products sold $1.25 billion of the notes on Monday at a spread of 110 bps over Treasuries.

The $1.25 billion tranche of 4.2% notes due Jan. 31, 2050 traded in the 162 bps area. The notes priced on Monday at a Treasuries plus 165 bps spread.

The notes are unconditionally guaranteed by parent company Enterprise Products Partners LP.

Enterprise Products is a midstream energy services provider based in Houston.

Credit spreads improved about 1 bp on Wednesday after softening 3 bps in the prior session. The Markit CDX North American Investment Grade 32 index closed 1 bp tighter at a spread of 57 bps.

FS KKR plans investor calls

FS KKR Capital (Baa3//BBB-) plans to hold fixed income investor calls on Thursday for a possible senior note offering, according to a 497AD filing with the Securities and Exchange Commission.

J.P. Morgan Securities LLC, SMBC Nikko Securities America, Inc. and SunTrust Robinson Humphrey, Inc. are the arrangers.

FS KKR closed Tuesday on a debut $507.5 million middle-market collateralized loan obligation called FS KKR MMC CLO 1 Ltd./FS KKR CLO 1 LLC.

The Philadelphia-based business development company invests mainly in senior secured and subordinated debt of private middle-market U.S. companies.

AbbVie deal on horizon

AbbVie (Baa2/A-/) is expected to issue about $40 billion of new investment-grade debt to fund its acquisition of Allergan plc (/BBB/BBB-) announced on Tuesday, according to a market source and press releases.

The cash and stock acquisition of the Dublin-based pharmaceutical manufacturer is valued at about $63 billion and is expected to close by early 2020.

The company was last in the high-grade primary market in 2018 with a $6 billion four-part offering of senior notes that priced Sept. 13.

AbbVie is a biopharmaceutical company based in North Chicago, Ill.

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