Morning Commentary: High-grade registered supply wanes; FS KKR, Commerzbank eye deals

By Cristal Cody

Tupelo, Miss., June 27 – Investment-grade primary action continued to remain fairly quiet at the start of Thursday's session in the midst of earnings releases.

No registered issuers offered bonds over the morning after also staying out of the primary market in the previous session.

High-grade companies including McCormick & Co., Inc., ConAgra Brands, Inc. and Walgreens Boots Alliance, Inc. released earnings reports before the market opened on Thursday.

On Wednesday, MassMutual Global Funding II priced an upsized $500 million of three-year funding agreement-backed notes in a Rule 144A and Regulation S offering.

Jackson National Life Global Funding also priced $300 million of three-year senior secured notes in the previous session.

Some potential deals are being marketed.

FS KKR Capital Corp. plans to hold fixed income investor calls on Thursday for a possible registered senior note offering.

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

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

Investment-grade corporate issuers have priced about $10 billion of notes week to date.

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

The week’s biggest deal priced on Monday when Enterprise Products Operating LLC sold $2.5 billion of guaranteed fixed-rate senior notes in two tranches.

The notes were seen in the secondary market wrapped around issuance to about 5 basis points tighter on the long tranche, a market source said.

Enterprise Products sold $1.25 billion of 3.125% notes due July 31, 2029 at a spread of 110 bps over Treasuries, while the $1.25 billion tranche of 4.2% notes due Jan. 31, 2050 priced at a Treasuries plus 165 bps spread.

In other secondary trading, Bank of Montreal’s $1 billion of 2.5% senior medium-term notes due June 28, 2024 that were brought to the primary market on Tuesday improved about 1 bp from issuance. The notes priced at a spread of 78 bps over Treasuries.

Secondary market volume was strong on Wednesday, Trace data shows. The session had $28.19 billion of high-grade issues traded, compared to $22.81 billion on Tuesday and $20.37 billion on Monday.

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