Morning Commentary: High-grade bonds weaken; Visa, Citigroup ease; credit spreads flat

By Cristal Cody

Tupelo, Miss., Dec. 14 – High-grade bonds opened the last full week of the year mostly weaker as the Street focuses on expectations that the Federal Reserve will raise the benchmark overnight rate by 25 basis points on Wednesday.

Visa Inc.’s senior notes (A1/A+) traded about 4 bps to 7 bps weaker in early secondary trading.

Citigroup Inc.’s 2.65% notes due 2020 were quoted 7 bps wider.

The three-month Libor yield rose 1 bp to 51 bps on Monday.

The Markit CDX North American Investment Grade 25 index was unchanged at a spread of 97 bps early Monday after it closed 9 bps wider on Friday.

Visa softens

Visa’s 2.2% notes due 2020 widened 7 bps to 60 bps bid, according to a market source.

Visa sold $3 billion of the notes on Wednesday at Treasuries plus 57 bps.

Visa’s 3.5% notes due 2025 eased 4 bps to 99 bps bid in secondary trading.

The company sold $4 billion of the notes in Wednesday’s sale at a spread of Treasuries plus 97 bps.

The retail electronic payments network operator is based in San Francisco.

Citigroup widens

Citigroup’s 2.65% notes due 2020 traded 7 bps wider at 117 bps bid, a market source said.

Citigroup sold $2.7 billion of the notes (Baa1/A-/A) on Oct. 19 at 133 bps over Treasuries.

The financial services company is based in New York.

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