CAM Investment Grade Weekly Insights

Fund Flows & Issuance: According to Lipper, for the week ended March 8th, investment grade funds posted a net inflow of $3.482bn. Per Lipper data, the year-to-date net inflow into investment grade funds is $29.434bn through March 8th. Per Bloomberg, investment grade corporate issuance through Thursday was just over $50bn –that total will grow for the full week with at least two new deals still pending as of Friday morning. Year-to-date investment grade corporate issuance will finish the week at ~$330bn. Per Wells Fargo, 2017 investment grade issuance is outpacing 2016 issuance by +11%.

(Bloomberg, Press Release) Toll Brothers, Inc. Prices $300 Million of Senior Notes

• The Notes have a coupon of 4.875% and will pay interest semi-annually on March 15 and September 15, commencing September 15, 2017.
• The Company expects to use the net proceeds from the Offering for general corporate purposes, which may include repayment of indebtedness.

(Bloomberg, Moodys) Moody’s Upgrades Vulcan Materials to Investment Grade

• Moody’s Investors Service (“Moody’s”) upgraded the senior unsecured debt ratings of Vulcan Materials Company (“Vulcan”) to Baa3 from Ba1. The rating outlook is stable.
• The upgrade reflects continued improvement in Vulcan’s financial ratios resulting from debt reduction and improved operating performance. The company’s adjusted debt-to-EBITDA declined to 2.5x for the year-end 2016 from 2.8x at year-end 2015 and 3.7x at year-end 2014. Adjusted operating margins have also improved over the same periods, increasing to 19.5% from 17.3% and 11.4%, respectively. Moreover, the rating upgrade reflects Moody’s belief that Vulcan has the willingness and ability to defend its investment grade rating in a downturn.

(Bloomberg, Kepler Cheuvreux) BASF Likely to Acquire Agro Assets Divested Due to M&A: Kepler

• Agro M&A to continue as Bayer/Monsanto and Dow/DuPont have to sell assets to obtain regulatory approval for their respective deals, Kepler Cheuvreux says in note.
  
  • Says BASF could approach regulatory bodies to express their interest in assets that are expected to be sold by Bayer and Dow/DuPont
  • Sumitomo could look to add to its agrochemical set-up
  • Private equity or generic firms such as FMC or Nufarm may also be interested
  • Bayer likely to divest their Liberty Link franchise, along with cotton and other selected seeds
  • Dow’s Mycogen seed assets likely to be put up for sale
  • This is a portfolio of corn, soya, sunflower, and canola with sales of $1.5b
  • Dow’s portfolio could sell for $7.5b or to 5x sales
  • Bayer’s Liberty Link alone may be worth up to EU4.8b
  • BASF is one of the top candidates for these “stranded” assets

(Bloomberg, Reuters) Bayer, Monsanto Said to Start $2.5b Asset Sales Next Week: Rtrs

• Bayer and Monsanto plan to start selling assets worth ~$2.5b to get regulatory clearance for their merger, Reuters reports, citing unidentified people close to matter.
  
  • Bayer’s advisers plan to send information packages next week to possible buyers: Reuters
  • Bayer, Monsanto declined to comment to Reuters
  • NOTE: Feb. 23, Bayer/Monsanto Deal More Than 80% Likely to Close: Citi