Primary market pauses; deluge of issuance expected in week ahead; Citigroup paper firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Jan. 29 – The investment-grade primary market was empty of new issuance to close out the week on Friday, though sources are eyeing a ramp-up in supply for the week ahead.

The investment-grade bond market tallied around $18 billion of new issuance this week, as a snowstorm slammed the northeast U.S. and the Federal Reserve conducted its two-day policy meeting, slowing things down for the primary.

The total fell short of sources’ expectations that had called for around $20 billion to $25 billion of supply.

Meanwhile, Lipper reported inflows of $2.866 billion into corporate investment-grade bond funds for the week ended Jan. 28.

The total was up from last week’s inflows of $1.137 billion, bringing the year-to-date total inflows to $8.466 billion.

Looking forward, the primary is expected to see a deluge of new issuance in the week ahead, with around $25 billion to $30 billion expected to price.

Investment-grade bonds were mixed on Friday, while credit spreads eased over the session, market sources said.

The Markit CDX North American Investment Grade index widened 3 basis points to a spread of 71 bps over the day.

Traders and market analysts were focused earlier in the session on weak gross domestic product numbers. The Department of Commerce estimated that the fourth-quarter gross domestic product rose at a 2.6% annual rate, weaker than the 3% forecast and the 5% increase seen in the third quarter.

In the secondary bond market, Citigroup Inc.’s 1.8% senior notes due 2018 traded 5 bps tighter than where the notes priced on Thursday, a source said.

Citigroup improves

Citigroup’s 1.8% senior notes due 2018 priced on Thursday firmed to 92 bps offered, a market source said on Friday.

Citigroup sold $2 billion of the senior notes (Baa2/A-/A) at a spread of Treasuries plus 97 bps.

The bank is based in New York.

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