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Midday Commentary: Investment-grade bonds soft at open; financial paper mixed in early trade
By Cristal Cody
Tupelo, Miss., Jan. 23 - High-grade bonds opened slightly softer on Thursday, according to market sources.
"Credit spreads are leaking wider this morning on the CDS indices, but cash bond spreads remain at their recent tights," RBC Capital Markets, LLC analysts said in a note. "While we are tracking on pace for record issuance for January, we are reading some notes that are pointing to the recent performance of some new issues in the secondary market as an indication of potential trouble on the horizon."
The Markit CDX North American Investment Grade series 21 Index ended unchanged on Wednesday at a spread of 66 basis points.
Financial paper was mixed in early trading, sources said.
JPMorgan Chase & Co.'s 4.85% senior notes due 2044 have widened in the secondary market since the issue priced on Tuesday, according to a market source.
Morgan Stanley & Co. Inc.'s 2.5% senior notes due 2019 firmed 1 bp from the previous day, a market source said.
JPMorgan eases
JPMorgan's 4.85% notes due 2044 (A3/A/A+) eased in secondary trading to 118 bps offered, according to a market source.
JPMorgan priced $1 billion of the bonds at Treasuries plus 112.5 bps on Tuesday as part of a $5.25 billion four-part sale of senior notes.
The financial services company is based in New York City.
Morgan Stanley better
Morgan Stanley's 2.5% notes due 2019 (Baa2/A-/A-) tightened to 92 bps offered early Thursday from 93 bps offered on Wednesday, a market source said.
Morgan Stanley sold $2 billion of the notes at a spread of Treasuries plus 95 bps on Tuesday as part of a $2.75 billion two-part offering of notes.
The financial services company is headquartered in New York City.
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