Morning Commentary: High-grade bonds soften; Morgan Stanley, Gilead Sciences notes ease

By Cristal Cody

Tupelo, Miss., Dec. 9 – High-grade bonds continued to weaken in early trading on Tuesday following a move wider on Monday as primary issuance slows, according to market sources.

The Markit CDX North American Investment Grade series 23 index ended 2 basis points wider at a spread of 65 bps on Monday.

Market participants are focused on the Federal Reserve’s upcoming two-day policy-setting meeting in the week ahead and any potential interest rate changes, sources said.

In the secondary market, Morgan Stanley & Co. Inc.’s 4.35% subordinated notes due 2026 were quoted 2 bps weaker in early trading and 5 bps wider than where the notes priced in September, according to a source.

Gilead Sciences Inc.’s 3.5% notes due 2025 traded 2 bps softer but remain more than 10 bps better than where the notes priced in November, a market source said.

Morgan Stanley softens

Morgan Stanley’s 4.35% subordinated notes due 2026 eased 2 bps to 200 bps offered, according to a market source.

Morgan Stanley sold $2.25 billion of the notes (Baa3/BBB+/BBB+) on Sept. 3 at a spread of Treasuries plus 195 bps.

The financial services company is based in New York City.

Gilead Sciences eases

Gilead Sciences’ 3.5% notes due 2025 (A3/A-/) traded 2 bps weaker at 101 bps offered, a market source said.

The company sold $1.75 billion of the notes on Nov. 12 at a spread of Treasuries plus 115 bps.

The biopharmaceutical company is based in Foster City, Calif.

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