High-grade registered supply quiets; FS KKR, Commerzbank eye deals; inflows decline

By Cristal Cody

Tupelo, Miss., June 27 – Investment-grade primary action remained fairly quiet over Thursday's session in the midst of earnings releases.

No registered issuers offered bonds during the session after also staying out of the primary market on Wednesday.

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

Lipper US Fund Flows on Thursday reported inflows of $3.24 billion for corporate investment-grade funds in the week ended Wednesday. The space saw inflows of $3.65 billion in the same period a week ago.

In other market data, the Labor Department’s initial unemployment claims for the week ended June 22 came in higher than expected at 227,000, compared to analysts’ forecasts of a 220,000 increase.

Elsewhere, a potential registered senior note offering from FS KKR Capital Corp. was marketed over the session.

FS KKR Capital held fixed income investor calls on Thursday via J.P. Morgan Securities LLC, SMBC Nikko Securities America, Inc. and SunTrust Robinson Humphrey, Inc.

Commerzbank AG also was 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.

New issues mostly firm

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.

The Markit CDX North American Investment Grade 32 index firmed more than 1 bp to close the day at a spread of 56 bps.

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