Morning Commentary: UnitedHealth bonds stable; Reynolds softer; credit spreads ease

By Cristal Cody

Tupelo, Miss., July 27 – High-grade bond market activity was mostly quiet early Monday with traders focused on the two-day Federal Reserve policy meeting that starts on Tuesday and any signals of a fall rate hike. Bonds were trading mostly unchanged to modestly softer, sources said.

UnitedHealth Group Inc.’s 4.75% senior notes due 2045 were flat in secondary trading but remain better than issuance.

Also in the secondary market, Reynolds American Inc.’s 4.45% senior notes due 2025 eased 2 basis points.

The Markit CDX North American Investment Grade index was quoted 1 bp weaker at a spread of 73 bps over the morning. The CDX index ended on Friday 2 bps wider at a spread of 72 bps.

UnitedHealth steady

UnitedHealth’s 4.75% bonds due 2045 were unchanged at 156 bps offered in secondary trading, a source said early Monday.

The company sold $2 billion of the bonds (A3/A+/A-) at 165 bps over Treasuries on July 20 as part of a $10.5 billion eight-tranche deal.

UnitedHealth is a diversified health company based in Minnetonka, Minn.

Reynolds American eases

Reynolds American’s 4.45% notes due 2025 (Baa3/BBB-) traded 2 bps weaker at 191 bps offered, according to a market source.

The company priced the $2.5 billion tranche on June 9 at a spread of Treasuries plus 205 bps as part of a $9 billion six-part notes offering.

The manufacturer and marketer of cigarettes and other tobacco products is based in Winston-Salem, N.C.

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