Midday Commentary: New investment-grade bonds better; Enel up in quiet market ahead of FOMC

By Cristal Cody

Tupelo, Miss., Sept. 18 - New investment-grade bond issues traded stronger in early secondary trading on Wednesday, with activity light in front of the Federal Open Market Committee announcement later in the day, sources said.

"Quiet ahead of the Fed," a trader said.

The FOMC will release its rate decision, followed by a press conference from Federal Reserve chairman Ben Bernanke. Market sources expect the target rate to remain unchanged in the 0% to 0.25% range and the Fed to announce a reduction in the $85 billion a month asset purchase program.

Credit spreads overall were mostly unchanged in the wait for the Fed's announcement, a market source said.

Enel SpA's 8.75% senior subordinated notes due 2073 (Ba1/BB+/BBB-), which priced the previous day, traded more than 2 points above issue price, according to market sources.

HSBC USA Inc.'s 2.625% notes due 2018 tightened about 5 bps in early trading on Wednesday, a trader said.

SLM Corp.'s 5.5% notes due 2019 also rose in the morning session.

HSBC tightens

HSBC USA's 2.625% notes due 2018 (A2/A+/AA-) firmed to 97 bps bid, 95 bps offered early Wednesday, a trader said.

The notes went out in secondary trading on Tuesday at 101 bps bid, 96 bps offered.

HSBC sold $750 million of the five-year notes with a spread of Treasuries plus 105 bps earlier on Tuesday.

The financial services company is based in London.

Enel rises

Enel's 8.75% senior subordinated notes due 2073 rose to 101.625 bid, 101.75 offered early Wednesday, a trader said.

The Rome, Italy-based electric utility company sold $1.25 billion of the split-rated notes at 99.183 to yield 8.875% on Tuesday.

SLM better

SLM's 5.5% notes (Ba1/BBB-/BB+) due Jan. 15, 2019 rose to 99.5 bid, 99.75 offered on Wednesday, according to a trader.

The Newark, Del.-based provider of education loans sold $1.25 billion of the notes (Ba1/BBB-/BB+) at 98.877 to yield 5.75% on Tuesday.

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