Investment-grade primary grinds to halt ahead of Christmas; activity light; spreads widen

By Sheri Kasprzak and Aleesia Forni

New York, Dec. 24 - Investment-grade primary activity was nonexistent just ahead of Christmas, market sources said.

As insiders turned their attention to holiday gatherings and family, pricing action took an early holiday.

Fund outflows were a concern, according to numerous reports. One report from Bank of America noted that $860 million of fund outflows were reported last week, the first time since October 2011 that there was a negative flow from investment-grade funds.

Many are concerned, said some reports, that investment-grade debt is at a great risk of losing value in the coming year.

Spreads in the secondary market were "slightly wider" on concerns regarding the fiscal cliff, though trading was muted during the session, a trader said.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 93 basis points on Monday.

Tuesday's deal from Wells Fargo & Co. was trading 4 bps to 5 bps better on Monday, market sources said.

A trader quoted the $1.25 billion of 1.5% five-year notes at 74 bps bid, 70 bps offered earlier in the session.

Another source saw the notes at 73 bps bid, 68 bps offered later in the day.

The San Francisco-based financial services company sold the notes with a spread of Treasuries plus 78 bps on Tuesday.

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