Tentative start to high-grade bond sales in 2013; issuers ready to go; bank paper trades better

By Aleesia Forni and Andrea Heisinger

New York, Jan. 2 - The new year got off to a slow start in the investment-grade bond market on Wednesday as market conditions were ripe for new offerings, but no companies opted to sell.

There remains $5 billion to $10 billion of supply expected to be priced in the coming two days, sources said, and a handful of issuers are ready to go for Thursday.

"I know we have three non-financials on tap for tomorrow," a syndicate source said.

The source also said after the close that "people are just getting back in their seats" on Wednesday, and that was why the primary side of the market was vacant.

A market source remarked, "Based on how today went, people are ready to go," referring to the stock markets ending on a high note after fiscal cliff talks reached a resolution in Congress.

"I'm sure there are opportunistic [issuers] ready to go," the market source said.

Risk appetite was strong during the session, sources said, as the secondary market saw bank paper from J.P. Morgan, Bank of Nova Scotia, Citigroup and Wells Fargo & Co. trade better during the session.

Wells Fargo's 1.5% five-year notes, which priced in December, were trading 5 bps better on Wednesday.

J.P. Morgan's 6.3% notes due 2019 were seen 16 bps tighter. The 6.375% notes due 2019 from Citigroup tightened 15 bps on the day.

Bank of Nova Scotia's 1.85% notes due 2015 were quoted 11 bps better.

Wells Fargo firms

Wells Fargo's notes were quoted 5 bps tighter at 68 bps bid, 63 bps offered on Wednesday.

A trader had quoted the notes at 73 bps bid, 68 bps offered on Dec. 24.

The San Francisco-based financial services company sold the notes with a spread of Treasuries plus 78 bps on Dec. 18.

J.P. Morgan tighter

The secondary also saw the $3 billion 6.3% issue from J.P. Morgan due 2019 tighten 16 bps to 188 bps bid.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Nova Scotia better

In other trading, Bank of Nova Scotia's 1.85% notes due 2015 tightened 11 bps to 30 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January 2012.

Citi tightens

Citigroup's 8.5% 10-year notes tightened 15 bps to 71 bps bid on Wednesday.

The bank priced $1 billion notes due 2019 at Treasuries plus 437.5 bps on June 11, 2009.

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