Primary turns quiet; week's issuance beats expectations; Citi, BofA, Kroger firm in secondary

By Aleesia Forni and Andrea Heisinger

New York, July 19 - After a strong week of investment-grade bond issuance, Friday saw no new deals come to the market.

Nearly $15 billion of bonds were sold in the market throughout the week, not including the many sovereign trades. That was above the $5 billion to $10 billion of expected supply.

Many of the week's offerings were from financial names and totaled well over $1 billion in size, which boosted the week's total despite a mid-week break from deals when Federal Reserve chairman Ben Bernanke spoke before a House committee.

The coming week should see "upwards of $10 [billion] to $15 [billion] of issuance," a source said late Friday.

"I'm not sure what we'll have Monday, but should be strong most of the week," she added.

In secondary action, recent issues continued to see strong demand in trading on Friday, though one market source noted that the day's pace was "fairly quiet."

Thursday's deals from Citigroup Inc., Bank of America Corp. and Kroger Co. traded better during the session, one market source said.

Meanwhile, the Markit CDX North American Investment Grade index was 1 basis point tighter at a spread of 74 bps early during the session.

Citi notes tighten

One trader quoted Citigroup's new $1.5 billion of 1.7% three-year notes 3 bps tighter on the day at 107 bps bid, 103 bps offered.

The notes were sold at a spread of Treasuries plus 112 bps.

The New York-based financial services company's sale also included a $1 billion tranche of three-year floating-rate notes priced at par to yield Libor plus 96 bps.

Kroger firms

In other secondary market activity, Kroger's $600 million tranche of 3.85% 10-year notes, which sold at a spread of Treasuries plus 132.5 bps on Thursday, was quoted 5 bps better on Friday.

The trader saw the notes at 123 bps bid, 119 bps offered.

Meanwhile, the company's new $400 million of 5.15% 30-year bonds traded 2 bps better at 146 bps bid, 142 bps offered.

The Cincinnati-based grocery retailer sold the notes at 155 bps over Treasuries.

BofA sees demand

Bank of America's $2 billion of 4.1% 10-year notes traded 9 bps better on Friday at 149 bps bid, 144 bps offered, a trader said near the end of the session.

The notes priced at a spread of Treasuries plus 157 bps on Thursday.

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

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