Midday Commentary: High-grade market 'soft and squishy'; Consumers Energy bonds firm

By Cristal Cody

Tupelo, Miss., Aug. 6 - Investment-grade bonds opened flat to slightly weaker for the most part on Tuesday, according to market sources.

"Feels a little softer - soft and squishy on some things that priced a little better," one trader said.

Other new issues, such as Consumers Energy Co.'s 3.375% first mortgage bonds due 2023 sold on Monday, firmed early in the secondary market, according to traders.

The Jackson, Miss.-based electric and gas utility sold $325 million of the bonds (A2/A-/A-) at a spread of 73 basis points over Treasuries. The bonds tightened late Monday to 71 bps bid, 69 bps offered and firmed early Tuesday to 70 bps bid, 69 bps offered, traders said.

Genworth Holdings Inc.'s $400 million offering of 4.9% notes due 2023 (Baa3/BBB-/) was seen in Tuesday's early session at 220 bps offered, a trader said. The Richmond, Va.-based financial security company priced the notes on Monday at a spread of Treasuries plus 230 bps.

The Markit CDX Series 20 North American Investment Grade index widened about 0.2 bp early Tuesday to a spread of 73 bps.

"Quiet day yesterday, same today," a trader said.

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