FOMC minutes, sour tone keep high-grade bond issuers on sidelines; oil sector bonds weaken

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 19 – The investment-grade primary market took a pause on Wednesday.

Issuers stayed on the sidelines during the session amid lower stocks and the release of the minutes from the Federal Open Market Committee’s July policy meeting.

Primary activity is likely to remain subdued to close out the week, sources predict.

So far, $7.2 billion of new high-grade rated paper has come to market this week, with the bulk of that pricing during a frenzied Monday session.

Around $10 billion of supply was forecasted.

Oil and energy bonds continued to widen in secondary trading on Wednesday.

Marathon Oil Corp.’s senior notes (Baa1/BBB) traded 1 basis point to 5 bps weaker.

Exxon Mobil Corp.’s 2.709% notes due 2025 eased 3 bps during the session.

ConocoPhillips Co.’s senior notes (A1/A) headed out 1 bp to 5 bps wider.

The Markit CDX North American Investment Grade index widened 1 bp on Wednesday to a spread of 79 bps.

Marathon Oil widens

Marathon Oil’s 3.85% notes due 2025 eased 1 bp to 251 bps bid in secondary trading, a market source said.

The company sold $900 million of the notes on June 1 at a spread of Treasuries plus 170 bps.

Marathon Oil’s 5.2% bonds due 2045 widened 5 bps to 285 bps bid on Wednesday.

Marathon Oil sold $500 million of the bonds in the June 1 offering at Treasuries plus 225 bps.

The energy company is based in Houston.

Exxon Mobil eases

Exxon Mobil’s 2.709% notes due 2025 traded late afternoon 3 bps weaker at 99 bps bid, according to a market source.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA) on March 3 at Treasuries plus 58 bps.

The oil and gas company is based in Irving, Texas.

ConocoPhillips soft

ConocoPhillips’ 2.2% notes due 2020 widened 5 bps during the session to 80 bps bid, according to a market source.

ConocoPhillips sold $500 million of the notes on May 13 at Treasuries plus 65 bps.

The company’s 3.35% notes due 2025 eased 1 bp to 154 bps bid.

ConocoPhillips sold $500 million of the notes in the May 13 sale at Treasuries plus 110 bps.

The energy company is based in Houston.

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