Primary empties ahead of holiday, BNP reopens bonds; AT&T, Citigroup tighter in secondary

By Andrea Heisinger and Cristal Cody

New York, Oct. 8 - No companies were reported to have tapped the high-grade bond market Friday, a syndicate source said in the early afternoon, as market participants turned their attention to the coming three-day weekend.

Although it was a full day, many desks were "ghost towns," he said, with "everyone leaving early."

Terms were given for a $600 million reopening of notes due 2015 by BNP Paribas that priced late the previous day.

There may be a fair amount of activity in new investment-grade bonds in the coming week but likely from overseas names and in emerging markets.

Higher-yielding securities have also become more appealing, the source said, meaning that the rush of companies hunting for low coupons may be on hold.

"I don't know what next week will be like," he said. "It will be hard to tell [until Tuesday]. We'll have to look at the open.

"I think we're going to be quiet for at least a couple of weeks."

Earnings season is partly to blame, but unemployment figures released by the Labor Department Friday, although somewhat steady, were still troubling to some investors and companies.

Secondary active

The secondary market was active early in day, but trading ground to a halt in the early afternoon ahead of the three-day weekend.

The bond markets are closed Monday for Columbus Day.

Overall investment-grade Trace volume dropped 25% to less than $10 billion, a source said.

The Markit CDX Series 14 North American investment-grade index was 1 point tighter on Friday at a spread of 97 basis points, Markit Group Ltd. said.

On light volumes, AT&T Inc.'s notes firmed in secondary trading, a source said.

AT&T's 5.8% notes due 2019 were 5 bps tighter at 50 bps late Friday.

The Dallas-based telecommunications company's 6.55% bonds due 2039 also firmed 5 bps to 160 bps from 165 bps on Thursday, the source said.

In the financial sector, bonds were mostly flat, a source said.

Citigroup Inc.'s short-term notes were unchanged, while the long end was tighter. The New York-based financial services company's 8.125% bonds due 2039 firmed 4 bps to 224 bps in the secondary, the source said.

Treasuries rallied early Friday on weak jobs data that accelerated expectations the Federal Reserve will implement more bond purchases to boost growth, a program called quantitative easing.

The yield on the 10-year note fell to the lowest since January 2009 early in the day and then ended late up 2 bps to 2.39%.

"Every day it seems like it's hitting a new record low," said Mary Ann Hurley, a fixed income trader for D.A. Davidson & Co.

The 30-year bond yield rose 5 bps to 3.75%.

The Labor Department said Friday that U.S. private-sector employers added 64,000 jobs in September, fewer jobs than the 85,000 that had been forecast.

BNP gives reopening terms

BNP Paribas reopened its issue of 3.25% notes due March 2015 for the second time late Thursday to add $600 million, a market source said on Friday.

The notes (Aa2/AA/AA-) priced at a spread of Treasuries plus 107 bps.

Barclays Capital Inc. was the bookrunner.

Total issuance is $1.75 billion, including $750 million priced on March 8 at 97 bps over Treasuries and $400 million sold on April 21 at 82 bps.

The financial services company is based in Paris.

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