Morning Commentary: High-grade bonds stable; Morgan Stanley, Bank of America firm; Citi flat

By Cristal Cody

Tupelo, Miss., June 17 – Primary action in the investment-grade bond market remains strong, while spreads are mostly flat ahead of potential tapering action by the Federal Reserve, according to market sources.

Issuance is expected later in the session from companies including Target Corp. and Assured Guaranty, Ltd.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 60 basis points.

Investment-grade paper was mixed in trading over the morning, according to market sources.

Morgan Stanley’s 3.875% notes due 2024 tightened 2 bps, while Citigroup Inc.’s 3.75% notes due 2024 were mostly unchanged from a week ago, a source said.

Bank of America Corp.’s 2.65% notes due 2019 were 3 bps better in early trading, according to a market source.

Morgan Stanley firms

Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) tightened 2 bps to 116 bps offered, a source said early Tuesday.

The notes traded slightly lower at 100.66 in midday trading from 100.95 on Monday, according to a market source.

Morgan Stanley sold $3 billion of the notes at 99.124 to yield 3.982%, or a spread of Treasuries plus 130 bps, on April 23.

The financial services company is based in New York City.

Citi stable

Citigroup’s 3.75% notes due 2024 (Baa2/A-/A) were quoted flat to about 1 bp tighter at 115 bps offered, a market source said.

The notes fell to 99.65 early Tuesday from 99.99 on Monday, according to a market source.

Citigroup sold $1.25 billion of the 10-year notes on June 9 at 99.876 to yield 3.765%, or a spread of Treasuries plus 115 bps.

The bank is based in New York.

Bank of America tightens

Bank of America’s 2.65% notes due 2019 (Baa2/A-/A) firmed 3 bps to 65 bps offered, a source said.

The notes were quoted edging lower at 101.12 from 101.34 on Monday, according to a market source.

Bank of America sold $2.5 billion of the notes on March 27 at 99.972 to yield 2.656%, or Treasuries plus 97 bps.

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

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