Midday Commentary: High-grade bonds move wider; CDX eases 3.25 bps

By Cristal Cody

Tupelo, Miss., Aug. 27 - Investment-grade bonds eased in early trading on Tuesday, according to market sources.

"Looks like spreads are wider this A.M.," a trader said.

The Markit CDX Series 20 North American Investment Grade index rose 3.25 basis points during the morning session.

"Credit spreads have moved wider as Syrian tensions have mounted in the past 24 hours," RBC Capital Markets, LLC analysts said in a morning note. "The geopolitical unrest has helped restore the more conventional relationship between government bond yields and credit spreads as a move wider in spreads in the last 24 hours has been offset by a rally in government bonds."

Santander flat

Light trading activity was seen early Tuesday in the high-grade secondary market, sources said.

Santander Holdings USA Inc.'s 3.45% senior notes due 2018 (Baa2/BBB/BBB), active in trading since the issue priced on Thursday, were little changed on Tuesday, sources said.

"Not seeing anything on Santander," a trader said.

The notes were last seen late Monday offered at 163 bps, the trader said.

Boston-based Santander Holdings, the parent company of Sovereign Bank and a subsidiary of Spain's Banco Santander, SA, sold $500 million of the notes at a spread of Treasuries plus 180 bps.

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