Investment-grade supply thin; Hyatt Hotels, Coca-Cola Femsa, Tencent Music tap primary market

By Cristal Cody

Tupelo, Miss., Aug. 26 – High-grade issuance is starting to slow in late August with just a handful of deals priced on Wednesday.

Hyatt Hotels Corp. sold $750 million of two-year floating-rate senior notes (Baa3/BBB-/).

A couple of high-grade emerging markets issuers also tapped the dollar-denominated primary market on Wednesday.

Tencent Music Entertainment Group priced an $800 million two-part registered offering of senior notes (A2/A/A), including $300 million of five-year notes and $500 million of 10-year notes.

Coca-Cola Femsa SAB de CV sold $705 million of 12-year green senior notes (A2/BBB+/A-) tighter than guidance.

Including Wednesday’s issues, high-grade corporate supply totals about $17 billion week to date, while sovereign, supranational and agency volume totals $10 billion so far this week.

About $15 billion to $20 billion of corporate deal volume was forecast for the week.

Market focus on Thursday is expected to be on Federal Reserve chairman Jerome Powell’s speech at the Federal Reserve Bank of Kansas City’s economic policy symposium in Jackson Hole, Wyo.

Royalty Pharma firms

New issues are trading mostly tighter in the secondary market, including Royalty Pharma plc’s $6 billion six-tranche Rule 144A and Regulation S offering of senior notes (Baa3/BBB-/BBB-) priced on Monday in the week’s biggest deal so far.

Royalty Pharma’s notes have firmed about about 10 basis points to 15 bps across all the tranches, a source said.

The company’s 2.2% notes due Sept. 2, 2030 tightened to 169 bps bid.

Royalty Pharma sold $1 billion of the 10-year notes at a Treasuries plus 180 bps spread.

Initial price talk was at the 205 bps over Treasuries spread area.

High-grade credit spreads are more than 1 bp tighter this week.

The Markit CDX North American Investment Grade 33 index headed out modestly weaker on Wednesday at a spread of 66.56 bps.

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