Morning Commentary: Lloyds notes tighten; Morgan Stanley firms; credit spreads stable

By Cristal Cody

Eureka Springs, Ark., March 18 – Investment-grade bonds traded mostly better early Friday with market participants looking ahead to speeches over the day from three Federal Reserve members.

Lloyds Banking Group plc’s 4.65% subordinated tier 2 debt securities priced on Thursday tightened 7 basis points in the secondary market.

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

The Markit CDX North American Investment Grade index was unchanged at the start of the session at a spread of 83 bps.

Three-month Libor was stable at 64 bps.

Secondary trading volume fell to $17.76 billion on Thursday from $20.59 billion of high-grade bonds traded on Wednesday, according to Trace.

Lloyds firms

Lloyds Banking’s 4.65% notes due March 24, 2026 traded 7 bps tighter at 271 bps offered, a market source said.

Lloyds sold $1.5 billion of the subordinated tier 2 debt securities (Baa2/ BBB-/A-) on Thursday at a spread of Treasuries plus 278 bps.

The retail bank is based in London.

Morgan Stanley improves

Morgan Stanley’s 3.875% notes due 2026 were quoted 4 bps better early Friday at 159 bps offered, according to a market source.

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

The financial services company is based in New York City.

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