Morning Commentary: High-grade issuers pack primary; Chevron, GM, Leidos, HSBC on tap

By Cristal Cody

Tupelo, Miss., May 7 – Investment-grade supply is set to remain heavy on Thursday following strong issuance already in the first three sessions of the week, putting May on track for a third consecutive month of record deal volume, market sources said.

Chevron Corp. is on deck with seven tranches of notes, including a floating-rate tranche.

The three-year floaters will price at Libor plus a spread. Initial talk on a three-year fixed-rate tranche is at the Treasuries plus 125 basis points area. A tranche of five-year notes is talked to print at the 150 bps spread area, a seven-year note is talked at the 180 bps spread area and a 10-year note is talked at the 190 bps spread area. Initial price guidance on a 20-year tranche is in the 195 bps over Treasuries area, while the 30-year notes are talked at the 205 bps spread area.

General Motors Co. plans to sell three tranches of notes, including long three-year notes talked at the 600 bps over Treasuries area, long five-year notes talked at the 650 bps spread area and long seven-year notes with initial talk in the 700 bps over Treasuries area.

Leidos Holdings Inc. is marketing three tranches of fixed-rate notes during the session. Initial price talk on a three-year tranche is in the Treasuries plus 425 bps area, while a five-year note is talked at the 462.5 bps area and a 10-year note is talked at the 487.5 bps spread area.

Discovery Communications, LLC intends to price two tranches of notes on Thursday. Initial price talk on a 10-year tranche is in the Treasuries plus 335 bps area, while a 30-year bond is talked at the 370 bps spread area.

Zoetis Inc. also is offering two tranches of notes, including 10-year notes with initial talk in the 185 bps spread area and 30-year notes talked at the 215 bps spread area.

Meanwhile, Citigroup Inc. intends to price a green bond offering of four-year fixed-to-floating rate senior notes with initial price talk in the Treasuries plus 170 bps area.

Other issuers expected during the session include Mohawk Industries Inc., Owens Corning, Global Payments Inc. and Vulcan Materials Co.

In other supply, the International Bank for Reconstruction and Development, or World Bank, launched a dollar-denominated offering of 10-year notes on Thursday at mid-swaps plus 35 bps.

HSBC Bank Canada also launched a Rule 144A and Regulation S offering of dollar-denominated three-year covered bonds (Aaa//AAA) early Thursday at mid-swaps plus 72 bps.

More than $47 billion of high-grade bonds have already priced week to date.

About $60 billion to $75 billion of volume was expected for the week.

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