Agency spreads tighten 1 to 2 bps; FHLB three-year global oversold

By Lisa Kerner

Charlotte, N.C., May 28 - Agency spreads ended 1 to 2 basis points tighter on Thursday as the Federal Home Loan Banks priced its $3 billion three-year global bond offering, according to a source.

The three-year sector of the market moved in 1 to 2 bps but wasn't overly affected by the pricing, said the trader.

Priced at 43 basis points over Treasuries, the global ended the day slightly better with a bid of 42 bps and a 41 bps offer, the source said.

FHLB priced the 1.875% Global at 99.912 to yield 1.905%.

According to FHLB, the issue was substantially oversold in less than 24 hours.

The issue was distributed primarily in the United States, which took down 69% of the total, FHLB said.

Other regions were Europe at 15% and Asia at 10%.

Investment advisors/fund managers led the way among investors, taking 57% of the total, followed by central banks at 17%, financial institutions at 12% and insurance/pension funds at 7%.

Bank of America, JP Morgan and UBS Securities acted as lead managers.

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