BAT dollar bonds see mixed performance in first trading day
Spreads on British American Tobacco’s newly minted eight-part dollar bond trade were slightly wider or wrapped around new issue levels early on Wednesday.
The US$3.5bn 3.557% 2027s - which priced at Treasuries plus 130bp with a 7bp new issue concession - were being quoted around 133bp, according to MarketAxess.
BAT’s US$2.5bn of August 2047s, which at a final spread of T+170bp came 6bp wide to the curve, were also trading wider at T+173bp.
“The fact that BAT came with concessions is not surprising, but it hasn’t traded well on the break,” said Jason Shoup, senior portfolio manager at Legal & General Investment Management America.
Yet while those levels were wider than initial pricing, secondary spreads on Wednesday marked a slight recovery from some widening in the gray markets post launch.
Bankers said the rush of supply over the last couple of weeks had started to cause some fatigue among investors.
The asset class has seen a whopping US$33.925bn in new supply this week alone.
That takes the August tally to US$53bn, a substantial amount for a month that usually marks the peak of the summer lull.