Primary empty; issuance expected to slow during upcoming week; recent deals mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, Va., Aug. 16 - The investment-grade primary market was quiet on Friday, sources said, seeing the second session in a row with no new deals priced.

Sources attributed the lack of issuance on Friday to continued volatility in Treasuries, along with the late-summer lull in the market.

Issuers priced roughly $13.5 billion of new bonds during the week ended Aug. 16, shy of earlier predictions of a $15 billion to $20 billion week.

Sources noted the market could see some issuers hit the primary on Monday, though next week's issuance is predicted to be less than previous weeks.

One syndicate source said he expects a $5 billion to $10 billion week, while a source at another desk believes issuance will fall closer to the $5 billion mark.

Investment-grade market volume remained light on Friday with issues mixed in the secondary market over the session, sources said.

Broadridge Financial Solutions, Inc.'s 3.95% senior notes due 2020 eased 2 basis points, while JPMorgan Chase & Co.'s 5.625% subordinated bonds due 2043 firmed 1 bp in thin secondary trading, traders said.

The Markit CDX Series 20 North American Investment Grade index headed out 2.88 bps wider on Friday.

"Quiet today," one trader said. "Big moves in Treasuries this week put a damper on [corporate] activity."

The 10-year Treasury note yield rose about 25 bps over the week to close at 2.829% on Friday in response to expectations the Federal Reserve will reduce the central bank's bond purchases at its September policy meeting.

JPMorgan in 1 bp

In the secondary market, JPMorgan Chase's 5.625% subordinated bonds due 2043 (A3/A-/A) came in about 1 bp to 198 bps bid going out on Friday from morning trading, a market source said.

The bonds were quoted early Friday at 199 bps bid, 194 bps offered.

The New York City-based financial services company sold $750 million of the bonds at a spread of Treasuries plus 190 bps on Wednesday.

Broadridge softer

Broadridge Financial Solutions' 3.95% senior notes due 2020 (Baa1/BBB/BBB+) traded a little softer from the flat start at 180 bps bid, 178 bps offered early Friday to finish the session at 182 bps bid, 178 bps offered, a trader said.

The Success, N.Y.-based provider of investor communication, securities processing and operations infrastructure to the financial services industry and corporations sold $400 million of the notes on Wednesday at a spread of Treasuries plus 185 bps.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS costs ended higher on Friday, a market source said.

Bank of America Corp.'s CDS costs increased 1 bp to 113 bps bid, 118 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 106 bps bid, 111 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 87 bps bid, 92 bps offered. Wells Fargo & Co.'s CDS costs closed up 1 bp at 67 bps bid, 71 bps offered.

Merrill Lynch's CDS costs widened 3 bps to 110 bps bid, 117 bps offered. Morgan Stanley's CDS costs rose 5 bps to 147 bps bid, 152 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended unchanged at 133 bps bid, 137 bps offered.

Paul Deckleman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.