Light activity expected for primary this week; spreads mostly flat; Bank of America firms

By Aleesia Forni

Virginia Beach, Aug. 25 – The high-grade bond market was quiet on Monday, with no new deals pricing during the session.

“Lots [of bankers] out this week,” a source said on Monday.

Sources are expecting a lack of primary activity this week ahead of the extended Labor Day holiday weekend.

Action should likely resume once September is underway.

In the secondary market, spreads were mostly unchanged to slightly tighter.

The Markit CDX North American Investment Grade series 22 index firmed 2 basis points on Monday to a spread of 56 bps.

One source noted that bank and financial paper was mostly flat during Monday’s session.

Bank of America Corp.’s 4% notes due 2024 (Baa2/A-/A) firmed 1 bp compared to Friday’s session.

In other trading, bonds from Roche firmed on the day following the announcement that the company plans to acquire InterMune for $8.3 billion in cash.

Roche bonds firm

Roche’s existing 6% bonds due 2019 traded better on the day, a source said.

The tranche was quoted at 45 bps bid late Monday.

The $4.5 billion of bonds was part of an upsized $16 billion six-part offering that priced in 2009. At the time of its pricing, the deal was the largest corporate new issue on record.

The company announced on Monday that it would pay $74.00 per share to acquire biotechnology company InterMune.

The pharmaceutical and health-care company known as F. Hoffmann-La Roche AG is based in Basel, Switzerland.

BofA tightens

Bank of America’s 4% notes due 2024 traded tighter on Monday at 129 bps offered, a market source said.

The notes were quoted a week ago at 130 bps offered.

Bank of America sold $2.75 billion of the notes on March 27 at a spread of Treasuries plus 137 bps.

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

Bank/brokerage CDS costs lower

Investment-grade bank and brokerage CDS prices were lower again on Monday, according to a market source.

Bank of America’s CDS costs ended 2 bps tighter at 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were also 2 bps tighter at 64 bps bid, 67 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 51 bps bid, 54 bps offered. Wells Fargo & Co.’s CDS costs were 1 bp lower at 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs closed 2 bps tighter at 66 bps bid, 70 bps offered. Morgan Stanley’s CDS costs ended 2 bps tighter at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 72 bps bid, 77 bps offered.

Paul Deckelman contributed to this review.

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