Market volatility sidelines issuers; Citigroup flat; Goldman firms; Morgan Stanley softens

By Aleesia Forni and Cristal Cody

New York, Feb. 24 – The high-grade primary market took a breather on Wednesday, with volatility in oil prices and an earlier drop in stocks helping keep issuers on the sidelines.

Inter-American Development Bank entered the sleepy primary, selling $500 million of floating-rate notes in line with talk.

Elsewhere on Wednesday, Freddie Mac said that it would forgo issuing Reference Notes on its Feb. 24 announcement date.

The quiet day follows what had been two frenzied days of issuance to open the week.

Roughly $29 billion of investment-grade supply has priced so far this week.

Sources had called for around $30 billion of supply following last week’s more than $41 billion total.

Credit spreads ended mostly unchanged, while high-grade bonds were mixed in secondary trading over the day.

The Markit CDX North American Investment Grade index closed flat to modestly softer at a spread of 115 basis points.

Citigroup Inc.’s 3.7% subordinated notes due 2026 were unchanged on Wednesday.

Goldman Sachs Group Inc.’s new senior notes (A3/BBB+/A) traded 1 bp to 5 bps better earlier in the day.

Morgan Stanley’s 3.875% senior notes due 2026 headed out 4 bps weaker.

IADB floaters

Inter-American Development Bank priced $500 million of floating-rate notes (Aaa/AAA) due April 20, 2020 on Wednesday at par to yield Libor plus 32 bps, according to a market source.

The notes sold in line with talk.

BofA Merrill Lynch and BMO Capital are the joint bookrunners.

The issuer provides financing for Latin American and Caribbean countries and is based in Washington, D.C.

Citigroup steady

Citigroup’s 3.7% notes due 2026 were unchanged on the day at 183 bps bid, a market source said.

Citigroup sold $2 billion of the notes (Baa1/BBB+/A) on Jan. 5 at a spread of Treasuries plus 148 bps.

The financial services company is based in New York.

Goldman firms

Goldman Sachs Group’s 3.75% notes due 2026 were seen earlier in the day trading at 198 bps offered, according to a market source.

Goldman sold $1.75 billion of the notes on Monday in a $3.6 billion three-part deal at a spread of Treasuries plus 203 bps.

The financial services company is based in New York City.

Morgan Stanley eases

Morgan Stanley’s 3.875% notes due 2026 eased 4 bps to 192 bps bid on Wednesday, a source said.

Morgan Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at 185 bps plus Treasuries.

The financial services company is based in New York City.

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