High-grade market quiet; no new issues on tap; Nasdaq OMX bonds mixed in trading

By Cristal Cody

Prospect News, Dec. 20 - The corporate bond market slowed to a crawl on Monday with thinly staffed desks during the short trading week.

"It's very, very quiet," a trader said Monday afternoon.

The bond markets will close early on Thursday and will be closed on Friday for the Christmas Day holiday.

No new issues were offered on Monday.

"There's not much going on today. It should be a quiet week," said one sellside source reached Monday afternoon.

The Markit CDX Series 14 North American investment-grade index was flat for a second market session at a spread of 86 bps, according to Markit Group Ltd.

Overall investment-grade Trace volume ended the day at about $9.5 billion, according to a market source.

"I just looked at volume - under $6 billion," one trader said in the afternoon. " 'Tis the season."

Investment-grade bonds "got some pressure because Treasuries finished poorly," another source said.

Treasuries rose earlier on Monday but ended the day flat on extremely light holiday trading following another two sets of bond buybacks by the Federal Reserve.

The yield on the 10-year was unchanged at 3.33%. The 30-year bond also ended flat at 4.44%.

The Federal Reserve Bank of New York bought $7.79 billion of Treasuries due 2018 through 2020 early Monday as part of its $600 billion asset buyback program to stimulate the economy. In the second purchase on Monday, the Federal Reserve purchased $6.779 billion of two-year to four-year Treasuries.

In the high-grade secondary market, Nasdaq OMX Group Inc.'s new notes firmed 20 basis points, while its existing senior notes due 2020 widened 10 bps to 15 bps, a source said.

Overall, most sectors, including financials, were seen closing mixed to wider, a trader said.

"We opened up unchanged to a basis point or two better in the tech world. Now, the Oracles, Ciscos are all closing the day 2 basis points wider," the trader said.

Nasdaq notes firm 20 bps

Nasdaq OMX Group priced $370 million of 5.25% eight-year notes (Baa3/BBB) at a spread of Treasuries plus 270 bps on Friday.

In secondary trading, the notes firmed 20 bps, while Nasdaq OMX Group's existing 5.55% senior notes due 2020 widened, a source said.

"The new ones are 20 tighter. The other ones were off 10 to 15 basis points since the new one issued," the source said.

The global exchange group is based in New York City.

Sheri Kasprzak contributed to this report.

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