Issuers stand down to wait for investors; deals seen for Tuesday; telecom, bank paper firms

By Andrea Heisinger and Cristal Cody

New York, Aug. 29 - Investment-grade issuers shied away from the primary market on Monday as parts of the East Coast continued to clean up following Hurricane Irene.

A lack of public transportation in some areas made it harder to get both investors and those on the sellside in line as some weren't able to make it to their desk or office, sources said.

"Today the market was mostly fine," said one source after the close. "The issue was the issuers worried they wouldn't be able to get a hold of investors."

The source later added, "Nothing bad happened over the weekend, so it wasn't headlines or anything."

By the time everyone was accounted for in the morning, it was "too late to go out in the market," a market source said.

There should be at least a couple of deals in the market on Tuesday as things get more back to normal, the sources said. There's also a time crunch as those wanting to sell before the end of August or ahead of the long Labor Day weekend need to do so on or before Thursday.

"There's no reason why people wouldn't sell something tomorrow," the market source said.

Overall trading volume was flat at about $7.7 billion on Monday.

"Volume's relatively light," a trader said.

Trading was thin on a combination of the hurricane damage and a United Kingdom holiday.

"Dead day," one trader said.

Still, bonds traded better across all sectors. Bank and financial paper traded 15 basis points to 25 bps tighter on Monday, a trader said.

Bank of America Corp.'s notes were seen trading stronger.

A trader said that bank and brokerage credit default swaps costs declined in price on Monday, indicating increased investor confidence in the sector. Bank of America's CDS was seen 40 bps tighter at 290 bps, 300 bps. J.P. Morgan was 10 bps better at 115 bps, 125 bps.

On the brokerage side, Merrill Lynch's CDS costs fell by 35 bps to 340 bps, 365 bps. Morgan Stanley's ended 22 bps tighter at 283 bps, 293 bps and Goldman Sachs was seen 25 bps better at 208 bps, 218 bps.

In the telecommunications sector, bonds traded "anywhere from 5 to 10 [bps] better," a trader said.

Time Warner Cable Inc.'s 5.875% debentures due 2040 traded 7 bps better on the day.

R.R. Donnelly & Sons Co.'s CDS and bonds performed "a lot better" in trading on Monday, according to a trader. "The CDS is 30 basis points better," the trader said.

Bonds overall traded stronger on the day, and the Markit CDX Series 16 North American high-grade index improved 6 bps to a spread of 120 bps on Monday.

Treasuries fell across the curve as stocks rallied with the move into riskier assets on Monday. The benchmark 10-year Treasury note yield rose 7 bps to 2.26%. The 30-year bond yield ended the day 6 bps higher at 3.59%.

Bank of America firms

Bank of America's 3.75% notes due 2016 firmed 25 bps on Monday to 350 bps bid, 330 bps offered, a trader said.

The notes have been trading stronger since Warren Buffett's Berkshire Hathaway announced last week that it will invest $5 billion in the bank.

The financial services company is based in Charlotte, N.C.

Time Warner Cable tightens

Time Warner Cable's 5.875% debentures due 2040 (Baa2/BBB/BBB) traded 7 bps better on the day to 210 bps bid, 200 bps offered, a trader said Monday.

Time Warner Cable sold the debentures in a $1.2 billion tranche on Nov. 9, 2010 at a spread of 180 bps over Treasuries.

The cable TV operator is based in New York City.

R.R. Donnelly & Sons better

R.R. Donnelly's CDS firmed 30 bps on Monday, while the company's bonds also traded better, a trader said.

The company's 6.125% notes due 2017 closed the day at 88.50 bid, 90.00 offered - "about a point and a half better," the source said.

In May, the company's debt was downgraded from investment grade to junk, though the bonds still remain attractive to the high-grade market.

The commercial printing company is based in Chicago.

Paul Deckelman contributed to this review

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