High-grade issuers stand down on market tone; spreads trade weaker overall in secondary market

By Aleesia Forni and Andrea Heisinger

New York, June 11 - Issuers shied away from the high-grade primary on Tuesday as market conditions worsened.

Monday saw a small crop of deals, mostly from utility names.

When Tuesday began, the tone of credit markets along with equities had soured, and sources said there were no issuers willing to touch the high-grade market.

"I think it's a factor of the market," one market source said. "Doesn't look good out there."

Some of the drop was tied to jitters over recent actions made by central banks around the world and some negative moves in Treasuries.

"We're in a sell-off right now," a second market source said. "It doesn't look like we'll recover really soon."

In trading of preferred stock, Apollo Investment Corp.'s newly priced $135 million of 6.875% $25-par senior notes due 2043 were pegged at $24.58 bid, $24.72 offered at midday.

A trader said he believed the issue - which priced Monday - had freed to trade.

After the bell, a market source confirmed that the issue had freed up, seeing the paper closing at $24.60.

The volume-weighted average price was $24.63.

Spreads in the investment-grade secondary market were generally 5 basis points to 10 bps weaker on the day, one trader said near the day's close.

In recent issues, Monday's deals from Duke Energy Corp. and South Carolina Electric & Gas Co. traded weaker compared to levels seen early Tuesday, the source added.

Duke Energy's upsized $500 million of 2.1% five-year senior notes traded 3 bps wider at 96 bps bid, 93 bps offered.

The notes priced at Treasuries plus 100 bps.

The diversified energy company is based in Charlotte, N.C.

Meanwhile, the $400 million of 4.6% 30-year bonds from South Carolina Electric & Gas were quoted 2 bps wider at 127 bps bid, 123 bps offered.

The Cayce, S.C.-based utility priced the offering at a spread of Treasuries plus 128 bps.

Stephanie N. Rotondo contributed to this review.

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