High-grade credit spreads ease after rate hike; primary quiet; RBS, Comcast soften

By Cristal Cody

Tupelo, Miss., Dec. 19 – High-grade credit spreads widened on Wednesday following the Federal Reserve’s 0.25% rate hike for the Federal Funds target range to 2.25% to 2.5%.

The Markit CDX North American Investment Grade 31 index eased 4 basis points to a spread of 85 bps.

Treasury yields slipped and stocks also closed lower with the Nasdaq down 2.17% and the S&P 500 off 1.54%.

Although it’s a short note, Federal Home Loan Bank System announced on Wednesday that it priced $4 billion of six-month bonds linked to the Secured Overnight Financing Rate, a new benchmark that may be used to replace Libor. The notes due June 21, 2019 priced at SOFR plus 4 bps.

In the secondary market, Royal Bank of Scotland Group plc’s $1.75 billion of 5.076% fixed-to-floating rate senior notes due Jan. 27, 2030 eased 5 bps but have recovered some weakness from earlier in the month.

Comcast Corp.’s senior notes (A3/A-/A-) that priced as part of a $27 billion 12-part deal in October continue to be among the most active investment-grade issues traded in the secondary market, according to Trace data. The company’s 4.7% notes due Oct. 15, 2048 headed out about 2 bps weaker.

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