Treasury auctions could affect issuance; coming week seen positive; Microsoft bonds narrow

By Andrea Heisinger and Cristal Cody

New York, Feb. 4 - New bonds took a backseat in the investment-grade market on Friday, likely due to economic data, sources said.

Unemployment numbers were released for January, and while unemployment improved to 9% from 9.4% the previous month, the number of jobs added to the economy was disheartening.

The Labor Department said 36,000 jobs were added in January, a plunge from the 140,000 that had been forecast.

"I don't know if that was why [no one issued]," a syndicate source said late in the day.

There is "talk of deals" for Monday, but nothing specific has been announced, a source said. Tensions in Egypt have eased somewhat, but it depends on what the market tone looks like Monday morning, the source said.

Another factor in how many deals are seen at the top of the coming week is how Treasury bond auctions go.

"I think everyone is going to wait and see how they go before jumping in," the syndicate source said. "It looks like we'll have more deals than this week, though. It could be a positive week."

There were about $12.04 billion of bonds priced in the past week, according to Prospect News data.

Traders headed out early Friday, and overall investment-grade Trace volume dropped nearly 30% to less than $13 billion, sources said.

The Markit CDX Series 14 North American investment-grade index also was flat Friday at a spread of 82 basis points, according to Markit Group Ltd.

Treasuries ended the week down with yields higher by more than 30 bps across the middle to longer end of the curve.

The 10-year Treasury note yield rose to 3.63% on Friday from 3.55%. The 30-year bond yield added 7 bps to end at 4.73%.

"Treasuries are out 25 to 30 bps on the fives and 10s on the week," a source said.

Microsoft firms

In secondary trading, Microsoft Corp.'s older bonds have stayed strong since they priced in September, a source said.

Microsoft's bonds sold in a $4.75 billion deal on Sept. 22 firmed on Friday, a day after the company sold $2.25 billion of senior notes in three tranches, a source said.

In September, the 1.625% notes due 2015 priced at 40 bps over Treasuries and the 3% notes due 2020 sold at 60 bps over Treasuries.

On Friday, the 1.625% notes traded 15 bps tighter at 25 bps, according to the source. The 3% notes were quoted trading at 41 bps.

The software products and services company is based in Redmond, Wash.

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