Midday Commentary: High-grade market 'muted' amid government shutdown; Citi rises; Cox falls

By Cristal Cody

Tupelo, Miss., Oct. 4 - Investment-grade credit spreads opened marginally tighter on Friday, according to market sources.

"Market reaction to the first U.S. government shutdown in 17 years and the upcoming Oct. 17 deadline to raise the debt ceiling has been relatively muted," Barclays analysts said in a note on Friday.

The Markit CDX North American Investment Grade series 21 index eased 1 basis point on Thursday to a spread of 81 bps.

"Longer term, once we get past the macroeconomic effects of the government shutdown and reach an agreement to raise the debt ceiling, we believe credit fundamentals are likely to come back into focus," the Barclays analysts said. "While we believe the overall effect of rising rates on investment-grade spreads will be limited, we do expect credit curves to flatten."

The lack of economic data on Friday likely will keep activity minimal over the day, sources said.

The Department of Labor was expected to release the September jobs report on Friday, but the report has been delayed due to the fourth day of the partial government shutdown.

Citi notes climb

In the secondary market, Citigroup Inc.'s 6.675% subordinated notes due 2043 (Baa2/A-/A) traded higher at 108, a market source said on Friday.

The New York-based financial services company sold $1 billion of the 30-year notes at par on Sept. 10.

Cox falls

In the telecommunication, media and technology sector, Cox Communications Inc.'s bonds are trading weaker overall, according to a market source.

Cox's 2.95% notes due 2023 (Baa2/BBB/BBB+) were quoted at 86.

The Atlanta-based provider of phone, internet and television services sold $1 billion of the notes at 99.56 on April 24.

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