Morning Commentary: High-grade primary market quiet; Home Depot, Morgan Stanley tighten

By Cristal Cody

Tupelo, Miss., Feb. 5 – Investment-grade primary activity slowed on Friday with the market’s attention turning to economic data and concerns the Federal Reserve will raise interest rates again.

The Labor Department said January employment rose by 151,000 in January, less than the 190,000 forecast. The unemployment rate fell to 4.9% in January from 5% in December. The rate came in better than the 5% market analysts expected and is the lowest level since February 2008.

No new corporate bond deals were announced over the morning.

In secondary trading, Home Depot Inc.’s 3% senior notes due 2026 that priced mid-week tightened 3 basis points.

Morgan Stanley & Co. Inc.’s 3.875% senior notes due 2026 traded 4 bps better.

The three-month Libor yield was stable at 62 bps.

On Thursday, about $18.77 billion of investment-grade issues were traded, up slightly from $18.28 billion of bonds traded on Wednesday, according to Trace.

Home Depot tightens

Home Depot’s 3% notes due 2026 traded 3 bps tighter early Friday at 113 bps offered, a market source said.

The company sold $1.3 billion of the notes (A2/A/A) at Treasuries plus 120 bps on Wednesday as part of a $3 billion three-part bond offering.

Home Depot is an Atlanta-based home improvement retailer.

Morgan Stanley firms

Morgan Stanley’s 3.875% notes due 2026 were quoted 4 bps tighter at 182 bps offered in the secondary market, a source said.

Moran Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at a spread of 185 bps over Treasuries.

The financial services company is based in New York City.

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