JPMorgan reopens notes as economic data stalls deals; GE Capital widens, Caterpillar firms

By Andrea Heisinger and Cristal Cody

New York, July 29 - Weak economic numbers and an ongoing standoff in Congress over the debt ceiling kept most issuers out of the debt market on Friday except for a reopening of notes by JPMorgan Chase & Co.

The banking giant reopened its 3.15% notes due 2016 to add $855 million. It was the second reopening of the paper originally priced on June 22.

There were three new deals priced on Thursday - all of them due to funding needs of the company.

Friday the U.S. gross domestic product was shown to have not expanded as much as economists had hoped in the second quarter, putting a further shadow on an already unstable credit market.

One source said it was "hard to tell if there was any significant change" in the primary on Friday due to the lack of new deals. He said that instead, people were watching how deals from Thursday and earlier in the week performed in trading.

It's unclear what Monday or any days beyond that will look like as August could get off to a rocky start if no deal on the debt ceiling is reached over the weekend.

"I would imagine everyone's going to sit on their hands," he said. "It's not looking good."

Trading in corporate bonds stayed slower over the week as investors take a wait-and-see approach.

Overall trading volume dropped more than 20% on Friday to about $10.5 billion.

"We haven't seen as much investor interest this week as we've had," said one trader.

The Markit CDX Series 15 North American investment-grade index was unchanged for a third day on Friday at a spread of 96 basis points, according to Markit Group Ltd.

General Electric Capital Corp.'s notes widened in trading over the week, ending about 7 bps to 10 bps wider.

Caterpillar Financial Services Corp.'s notes sold on Tuesday ended Friday 2 bps tighter.

Treasuries rallied on the softer economic data despite the United States facing default.

"Guess people still think it's a safe place to hang out," a trader said.

The benchmark 10-year Treasury note yield dropped to 2.8% from 2.94%. The 30-year bond yield fell to 4.12% from 4.25%.

JPMorgan reopens

JPMorgan Chase reopened an issue of 3.15% notes due 2016 to add $855 million, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aa3/A+/AA-) were priced at a spread of 160 bps over Treasuries.

Total issuance is $3.855 billion, including $500 million of notes sold in a reopening on July 20, along with the original issue of $2.5 billion of notes on June 22 at 165 bps over Treasuries.

J.P. Morgan Securities LLC was the bookrunner.

The financial services company is based in New York City.

GE Capital widens

GE Capital's 4.625% senior notes due 2021 traded Friday at 148 bps bid, 141 bps offered.

"They were 139 this morning and 138 the other day," a trader said. "They're 7 to 10 basis points wider than the end of last week, so they've cheapened up a bit."

The financing arm of General Electric Co. is based in Fairfield, Conn.

Caterpillar firms

Caterpillar Financial Services' new notes traded stronger on Friday.

"Caterpillar, now there's a great name," a trader said. "They've held in pretty well."

The company's 2.05% five-year medium-term notes (A2/A/A) were seen offered at 60 bps over Treasuries on Friday.

The company sold $750 million of the notes due 2016 at Treasuries plus 62 bps on Tuesday.

The funding arm of heavy equipment maker Caterpillar is based in Nashville.

© 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.