Tone improves following FOMC statement; spreads improve; bank, financial paper tightens

By Aleesia Forni and Cristal Cody

Virginia Beach, Dec. 17 – The investment-grade bond market saw an upturn in the market’s tone on Wednesday following the release of the Federal Reserve’s policy statement.

The Fed wrapped up its two-day Federal Open Market Committee meeting during the session and said that it will continue to keep borrowing costs near zero for a “considerable time.”

“Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” the FOMC statement said.

Most sources believe the Federal Reserve will begin raising interest rates in mid-2015.

As expected, the investment-grade primary market saw no new deals pricing during the session, and the primary market is likely shut down until the new year.

High-grade corporate bond spreads improved overall over the day, market sources said.

The Markit CDX North American Investment Grade series 23 index tightened 6 basis points to a spread of 70 bps.

In the secondary market, bank and financial paper recovered losses from over the past two sessions, according to market sources.

Citigroup Inc.’s 3.75% notes due 2024 traded more than 10 bps better on Wednesday.

Morgan Stanley & Co. Inc.’s 3.875% notes due 2024 tightened 9 bps.

Goldman Sachs Group Inc.’s 3.85% notes due 2024 improved 1 bp to 3 bps in secondary trading.

JPMorgan Chase & Co.’s 3.625% senior notes due 2024 closed the session 4 bps tighter.

Citigroup tightens

Citigroup’s 3.75% notes due 2024 (Baa2/A-/A) were quoted better at 133 bps bid on Wednesday, compared to where the paper traded at 144 bps bid in the previous session, a market source said.

The bank sold $1.25 billion of the 10-year notes on June 9, 2014 at Treasuries plus 115 bps.

Citigroup is based in New York City.

Morgan Stanley better

Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) tightened 9 bps to trade late afternoon at 144 bps offered, a market source said.

Morgan Stanley sold $3 billion of the notes at a spread of Treasuries plus 130 bps on April 23, 2014.

The financial services company is based in New York City.

Goldman firms

Goldman Sachs’ 3.85% notes due 2024 (Baa1/A-/A) firmed 1 bp to 3 bps over the day to 154 bps offered, according to a market source.

Goldman Sachs sold $2.25 billion of the notes on June 30 at Treasuries plus 135 bps.

The financial services company is based in New York City.

JPMorgan improves

JPMorgan’s 3.625% senior notes due 2024 (A3/A/A+) tightened 4 bps to 125 bps bid, according to a market source.

JPMorgan sold $2 billion of the notes on May 6, 2014 at 110 bps plus Treasuries.

The financial services company is based in New York City.

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