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Midday Commentary: Investment-grade bonds steady; Wells Fargo tightens; Tyson Foods softens
By Cristal Cody
Tupelo, Miss., May 30 - Investment-grade bond spreads remained tight but mostly unchanged in light month-end activity early Friday after the market absorbed more than $13 billion of supply over the short week, sources said.
The Markit CDX North American Investment Grade series 22 index firmed 1 basis point to a spread of 62 bps on Thursday.
Bonds were mostly tighter in midday trading, a source said.
Wells Fargo & Co.'s 4.1% subordinated notes due 2026 firmed 4 bps to 5 bps, according to a market source.
In other trading, Tyson Foods, Inc.'s notes were softer after the company entered a bidding war with Pilgrim's Pride Corp. for packaged meat manufacturer Hillshire Brands Co., which is underway with plans to acquire Pinnacle Foods Inc.
"This has led to significant moves in the credits," Barclays analysts said in a note on Friday.
Wells Fargo better
Wells Fargo's 4.1% subordinated notes due 2026 were quoted over the morning at levels 4 bps to 5 bps tighter at 151 bps offered, according to a market source.
Wells Fargo (A2/A+/AA-) sold the 12-year notes on Tuesday at a spread of Treasuries plus 160 bps.
The bank is based in San Francisco.
Tyson eases
Tyson Foods' 4.5% notes due 2022 eased 3 bps to 122 bps offered following the company's $50.00-a-share cash bid on Thursday for Hillshire Brands, a source said on Friday.
The notes last traded at 105.5, according to a market source.
Tyson Foods (Baa3/BBB/BBB) sold $1 billion of the notes on June 6, 2012 at 99.458 to yield 4.568%, or a spread of 290 bps over Treasuries.
The beef, pork and poultry company is based in Springdale, Ark.
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