Morning Commentary: W.W. Grainger offers bonds; short-term flows flat; Otis notes rise

By Cristal Cody

Tupelo, Miss., Feb. 21 – W.W. Grainger, Inc. is marketing new bonds in the high-grade primary market early Friday, capping off a week that already has seen more than $32 billion of supply.

The company plans to price fixed-rate senior notes.

About $25 billion to as much as $40 billion of deal volume was forecast by market sources this week.

Inflows to U.S. funds and exchange traded funds moderated for the past week ended Wednesday following two weeks of heavy inflows, according to a BofA Securities, Inc. research note released on Friday.

Fund and ETF investors bought $9.35 billion of bonds, down from $13.91 billion in the prior week and $11.70 billion during the week of Feb. 5, credit strategist Yuri Seliger said.

Flows were weaker for high-grade, high-yield, loans and municipal bonds.

High-grade inflows, including corporates, agencies, Treasuries and mortgages, declined to $6.33 billion from $7.27 billion in the prior week, according to the report.

Short-term high-grade inflows were flat at $2.69 billion on the week, while inflows excluding short-term declined to $3.64 billion from $4.59 billion.

Meanwhile, high-grade fund inflows rose to $4.27 billion from $3.72 billion in the previous week.

ETF inflows fell to $2.06 billion from $3.55 billion a week earlier.

Elsewhere, new issues priced this week are mostly stronger in the secondary market, a source said.

Otis Worldwide Corp.’s $5.3 billion of senior notes (Baa2/BBB) that priced in six tranches on Wednesday traded about 1 basis point to 4 bps tighter.

The company’s 2.565% notes due Feb. 15, 2030 improved about 3 bps in secondary trading.

Otis sold $1.5 billion of the 10-year notes at a spread of 100 bps over Treasuries, compared to talk in the Treasuries plus 115 bps area.

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