Morning Commentary: Actavis notes active, firm in secondary; corporate spread curve ‘steep’

By Cristal Cody

Tupelo, Miss., April 1 – Actavis Funding SCS’s senior notes (Baa3/BBB-/BBB-) brought in early March are active in the secondary market, trading 1 basis point to 3 bps tighter, a source said.

The three-month Libor yield was 1 bp firmer at 27 bps early Wednesday.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 64 bps.

The “corporate spread curve remains steep,” RBC Capital Markets, LLC analysts said in a note on Wednesday. “What’s interesting is that because the corporate curve has not flattened to the extent of the Treasury curve, the corporate spread curve has steepened to 79 bps, which is at least a post-recession high.”

Traders were focused over the morning on economic data reports, including private payroll processor ADP’s March employment release. ADP said March employment rose 189,000, weaker than the 225,000 forecast.

The Labor Department will release the March jobs report on Friday.

Actavis firms

Actavis’ 3.8% notes due 2025 traded about 1 bp better at 149 bps offered in the secondary market, a source said.

The company sold $4 billion of the notes on March 3 at Treasuries plus 175 bps.

Actavis’ 4.75% notes due 2045 firmed about 1 bp to 183 bps offered, the source said.

The bonds priced in a $2.25 billion offering in the March sale at Treasuries plus 210 bps.

Actavis is a pharmaceutical company based in Dublin.

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