Morning Commentary: Investment-grade bond spreads firm; bank, financial paper weaker

By Cristal Cody

Tupelo, Miss., July 22 – Investment-grade bond spreads tightened modestly early Tuesday after softening in the previous session, while bank and financial paper traded wider, market sources said.

The Markit CDX North American Investment Grade series 22 index closed the previous session unchanged at a spread of 59 basis points.

Bank of America Corp.’s 4% notes due 2024 eased 4 bps in the secondary market, a source said.

Royal Bank of Scotland Group plc’s 5.125% subordinated tier 2 notes due 2024 widened about 7 bps in trading, according to a market source.

Bank of America soft

Bank of America’s 4% notes due 2024 (Baa2/A-/A) traded 4 bps weaker at 125 bps offered, a market source said.

The Charlotte, N.C.-based financial services company sold $2.75 billion of the notes on March 27 at a spread of Treasuries plus 137 bps.

RBS notes widen

Royal Bank of Scotland’s 5.125% notes due 2024 (Ba3/BB+/BBB-) eased about 7 bps to 256 bps offered, a source said.

Royal Bank of Scotland sold $2.25 billion of the 10-year notes on May 21 at Treasuries plus 270 bps.

The financial services company is based in Edinburgh.

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