Primary quiet amid market volatility; bank paper firms; AT&T, Verizon Communications stable

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 16 – The investment-grade primary bond market was silent on Thursday, with no new deals pricing during the session.

Though the tone of the market was stronger compared to Wednesday’s rollercoaster session, continued market volatility and worries over global economic growth kept a lid on any new issuance on Thursday.

“It’s really day-to-day,” one market source said, adding that the primary is unlikely to see any activity during Friday’s session.

If that is the case, the week’s total new issuance will fall far short of what sources had predicted to be around a $15 billion week.

Only three new deals have priced in the investment-grade bond market this week, bringing the week’s total supply to $4 billion.

Bank and financial paper ended the session stronger in secondary trading, a source said.

Bank of America Corp.’s 4% notes due 2024 and Morgan Stanley’s 3.875% notes due 2024 firmed 5 basis points during the session, according to the market source.

Bonds in the telecom sector traded mostly unchanged over the day, a source said.

AT&T Inc.’s 4.8% bonds due 2044 headed out flat after easing earlier in the session.

Verizon Communications Inc.’s 4.15% senior notes due 2024 were unchanged in the secondary market.

The Markit CDX North American Investment Grade series 23 index closed flat at a spread of 74 bps.

Bank of America firms

Bank of America’s 4% notes due 2024 firmed 5 bps to 141 bps offered, a market source said.

The issue (Baa2/A-/A) priced in a $2.75 billion offering on March 27 at a spread of Treasuries plus 137 bps.

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

Morgan Stanley improves

Morgan Stanley’s 3.875% notes due 2024 firmed to 141 bps offered from 146 bps offered on Wednesday, a market source said.

Morgan Stanley sold $3 billion of the notes (Baa2/A-/A-) at Treasuries plus 130 bps on April 23.

The financial services company is based in New York City.

AT&T stable

AT&T’s 4.8% notes due 2044 traded flat over the afternoon after easing 2 bps to 169 bps offered early in the day, according to a market source.

AT&T sold $2 billion of the 30-year notes (A3/A-/A) on June 3 at a spread of Treasuries plus 140 bps.

The telecommunications company is based in Dallas.

Verizon unchanged

Verizon’s 4.15% notes due 2024 (Baa1/BBB+/A-) traded flat over the day at 134 bps offered, a source said.

Verizon sold $1.25 billion of the 10-year notes on March 10 at Treasuries plus 140 bps.

The telecommunications company is based in New York City.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage credit default swap prices were lower on Thursday, according to a market source.

Bank of America’s CDS costs fell 3 bps to 76 bps bid, 79 bps offered. Citigroup Inc.’s CDS costs were 2 bps lower at 76 bps bid, 79 bps offered. JPMorgan Chase & Co.’s CDS costs were 1 bp lower at 61 bps bid, 64 bps offered. Wells Fargo & Co.’s CDS costs decreased 2 bps to 48 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs were 3 bps lower at 79 bps bid, 82 bps offered. Morgan Stanley’s CDS costs ended 2 bps lower at 88 bps bid, 93 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp lower at 91 bps bid, 94 bps offered.

Stephanie N. Rotondo contributed to this review

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