High-grade activity slows; credit spreads widen; rate hikes eyed; Comcast, Duke soften

By Cristal Cody

Tupelo, Miss., Dec. 20 – The investment-grade bond market closed up Thursday with light activity and even less expected on Friday, sources report.

The investment-grade primary market is basically finished for the year with no bonds priced week to date, sources said.

The Markit CDX North American Investment Grade 31 index softened 4 basis points to a spread of 89 bps after ending the previous session also 4 bps wider. Spreads have widened about 9 bps week to date.

Little, if any, deal volume is expected for the remainder of the year, but new supply is in the works for January, a source said.

High-grade market strategists revised rate expectations in the year ahead following the Federal Reserve’s monetary policy rate hike and dovish statement on Wednesday.

Several sources said they now expect two rate hikes in 2019, down from initial forecasts of up to four or five hikes in the new year.

In the secondary market, bonds were mixed during the session, a source said.

Comcast Corp.’s 4.7% notes due Oct. 15, 2048 eased about 4 bps to 5 bps after the issue headed out 2 bps weaker on Wednesday.

Duke Energy Carolinas, LLC’s 3.05% first and refunding mortgage bonds due March 15, 2023 priced earlier in the year widened 10 bps on the day.

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