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By John Balassi
March 13 (IFR) - The US high-grade primary market is seeinga healthy deal flow on Wednesday following consecutive issuancedays topping US$5bn, with a large benchmark deal helping todrive supply.
Although the credit indices have grinded to their bestlevels since the current index was rolled over in September,total returns on the Barclays Investment Grade Corporate indexhave remained negative as a result of the movement inTreasuries. Yields on the long-end of the Treasury curve havesold off almost 20bp in the past week as investors seek out morerisk.
One sector hit by extreme sensitivity to interest rates isutility operators, which tend to be debt-heavy and capitalintensive, and are also subject to regulation in terms ofraising prices to customers. Six utility companies have tappedthe new issue market this week to finance their high debt loadbefore borrowing gets too expensive.
Among the sizable offerings in the market on Wednesday isGlaxoSmithKline Capital Inc, which announceda USD benchmark SEC registered multi-tranche deal that consistsof three-year fixed and/or FRN, 10-year and 30-year seniorunsecured notes. Proceeds of the deal, led by DB, GS, JPM andUBS, are being used for general corporate purposes, includingrefinancing debt.
Initial whisper talk is that each of the tranches will bearound US$1bn, with price talk of Libor equivalents on the 3yrFRN, T+40-45bp on the 3yr fixed, T+95-100bp on the 10yr, andT+110-115bp on the 30yr.
GlaxoSmithKline capital last came to the USD market on May12, 2012 with a US$5bn three-part deal. That trade included aUS$1bn 0.75% 3yr at T+45bp, a US$2bn 1.50% 5yr at T+75bp, and aUS$2bn 2.85% 10yr at 100bp over Treasuries.
Goldcorp Inc is making the rounds with a USDbenchmark SEC registered two-part offering that consists of5-year and 10-year senior notes. The notes contain a change ofcontrol put at 101, with BAML and HSBC the active jointbooks. Proceeds are being used for debt repayment, capitalinvestment and working capital. Initial whisper talk was150-170bp on the 5yr and 187.5-200bp on the 10yr.
Skandinaviska Enskilda Banken AB is out with a USDbenchmark 144A/Reg S five-year fixed rate senior note via BAML,Barc, Citi and DB as joint books. Price guidance is T+105bp area(+/- 5bp).
Rounding out the remainder are a US$500m 144A/Reg Sfive-year from Wesfarmers Ltd, and US$250m no grow SECregistered 10-year senior note from Indiana Michigan Power Co.
At midday, the CDX indices are mostly unchanged despite anencouraging retail sales report that suggests the Americanconsumer is holding up reasonably well when factoring in highertaxes and higher energy prices.
The IG19 is currently trading 0.0625bp wider at79.50-79.9375 and the HY19 1/16 of a point lower at104.09375-104.21875. Treasuries are being moderately offered,with the 10-year yield 2.1bp higher at 2.044%.
U.S. Treasuries..........
U.S. Treasury outlook...
U.S. corporate bonds....
U.S. agencies...........
U.S. mortgage-backeds...
U.S. asset-backeds......
U.S. municipal bonds... (Reporting by John Balassi; Editing by Marc Carnegie)
