Volatile market conditions keep issuers away from high-grade primary; bond spreads widen

By Aleesia Forni

Virginia Beach, Sept. 29 – The high-grade bond market saw no new deals price on Monday, with market volatility keeping issuers on the sidelines.

Pro-democracy protests in Hong Kong helped to push spreads in the secondary market wider, putting a lid on any primary activity during the session.

The session did see two new deal announcements from International Bank for Reconstruction and Development (World Bank) and Dexia Credit Local.

Both set price talk for planned bond offerings, which are expected to price on Tuesday.

Weaker market conditions coupled with investor fatigue following the roughly $130 billion of new issuance the primary has seen this month could keep supply below what was predicted to be a $20 billion to $25 billion week.

Investment-grade bond spreads were trading wider during Monday’s session, according to market sources.

The Markit CDX North American Investment Grade series 22 index was 3 basis points wider at a spread of 67 bps.

Similarly, a trader noted that bank and financial paper was around 3 bps wider during the session.

Abbey National Treasury Services plc’s $500 million of 1.65% notes due 2017, which priced on Wednesday, weakened 2 bps on the day.

International Bank for Reconstruction and Development is planning to price a benchmark offering of five-year notes, according to a market source.

The notes are talked in the mid-swaps minus 2 bps area.

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