Morning Commentary: EOG, American Water, Booking, Prudential, Omers among deals on deck

By Cristal Cody

Tupelo, Miss., April 8 – Several investment-grade issuers are expected to tap the primary market on Wednesday, while overall supply is beginning to slow from the record-breaking volume seen over the past month, sources report.

EOG Resources, Inc.’s deal is back on after the offering was postponed on March 20 amidst the coronavirus-related market volatility.

The company is expected to bring a two-part offering of senior notes (A3/A-) on Wednesday. The 10- and 30-year notes are initially talked to price with a spread in the Treasuries plus 450 basis points area.

American Water Capital Corp. also is marketing 10- and 30-year senior notes (Baa1/A) on Wednesday. Both tranches are talked to price at the Treasuries plus 275 bps area.

Norwalk, Conn.-based travel purveyor Booking Holdings Inc. intends to tap the primary market on Wednesday with three tranches of senior notes (A3/A-).

A tranche of five-year notes is talked to price at the Treasuries plus 412.5 bps area, while the seven- and 10-year tranches are talked to print in the 425 bps spread area.

Prudential plc is offering 10-year notes on Wednesday following fixed income investor calls held over the first two days of the week. Initial guidance on the 10-year notes is in the Treasuries plus 312.5 bps area.

Meanwhile, retailer Nordstrom, Inc. is offering $500 million of five-year senior notes (Baa2/BBB-) during the session in a deal expected to be run off the high-yield desk.

New York Life Insurance Co. also plans to price new 30-year notes on Wednesday. The issue is initially talked to come at the Treasuries plus 287.5 bps area.

Indianapolis Power & Light Co. parent company Ipalco Enterprises Inc. is in the day’s deal pipeline with a $475 million offering of senior secured notes (Baa3/BBB/BBB-) that are initially talked to print in the 400 bps over Treasuries area.

In addition, Omers Finance Trust (Aa1/AA+/AAA) plans to sell a benchmark offering of dollar-denominated three-year medium-term notes on Wednesday.

Initial price talk is in the Treasuries plus 80 bps area.

In other action on Wednesday, National Securities Clearing Corp. (Aaa/AA+) is holding fixed income investor calls for a Rule 144A and Regulation S offering of dollar-denominated senior notes.

Week to date, more than $28 billion of corporate bonds have priced.

As much as $80 billion of volume was expected by market sources for the holiday-shortened week. Wednesday’s session is the last full session of the week.

On Thursday, the financial markets will close early and remain closed on Friday for the Good Friday holiday.

New issues priced this week have mostly tightened, a source said.

Keurig Dr Pepper Inc.’s $1.5 billion of senior notes (Baa2/BBB) that priced in two tranches on Tuesday firmed about 5 bps to 6 bps in the secondary market.

The company’s $750 million offering of 3.2% notes due May 1, 2030 tightened 6 bps from where the notes priced Tuesday at a spread of 250 bps over Treasuries.

High-grade secondary market volume was heavy on Tuesday with $31.04 billion of bonds traded, up from $26.79 billion on Monday, according to Trace data.

Market tone was strong at the start of the day with stock indices up nearly 2% across the board.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 1.24% early Wednesday.

The Pimco Investment Grade Corporate Bond Index ETF gained 14 cents, or 0.14%, to 106.29 over the morning.

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