Morning Commentary: Actavis, Kraft long bonds firm; JPMorgan soft; focus on weak jobs report

By Cristal Cody

Tupelo, Miss., April 6 – Long investment-grade bonds traded mostly tighter early Monday with market participants focused on economic data after the long holiday weekend, sources said.

Actavis Funding SCS’s 4.75% senior notes due 2045 traded about 5 basis points tighter.

Kraft Foods Group Inc.’s 5% bonds due 2042 remain active and improved 3 bps as the company moves forward with plans to be acquired by H.J. Heinz Co.

In other secondary trading, JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 3 bps.

The Labor Department reported on Friday that March non-farm payrolls rose 126,000, well below the 245,000 forecast. The unemployment rate remained unchanged at 5.5%.

Three-month Libor yield was unchanged at 27 bps early Monday.

The Markit CDX North American Investment Grade series 23 index was flat at a spread of 63 bps.

Actavis tight

Actavis’ 4.75% notes due 2045 tightened about 5 bps to 178 bps offered, according to a market source.

The company sold $2.25 billion of the bonds (Baa3/BBB-/BBB-) on March 3 at Treasuries plus 210 bps.

Actavis is a pharmaceutical company based in Dublin.

Kraft improves

Kraft Foods’ 5% bonds due 2042 traded 3 bps tighter at 172 bps offered, a market source said.

The company sold $2 billion of the bonds (Baa2/BBB/) on May 30, 2012 at 235 bps over Treasuries.

Kraft plans to be acquired by the Heinz Co. in a deal valued at $36.6 billion.

The consumer packaged food and beverages company is based in Northfield, Ill.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 eased 3 bps to 118 bps offered in secondary trading, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

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