Morning Commentary: Morgan Stanley, U.S. Bancorp paper firms; credit spreads open wider

By Cristal Cody

Eureka Springs, Ark., July 26 – New investment-grade bank and financial paper remained mostly tighter in the secondary market on Tuesday as traders await the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday.

Morgan Stanley’s 3.125% global medium-term notes due 2026 that priced on Wednesday firmed 2 basis points and traded more than 10 bps tighter than issuance.

U.S. Bancorp’s 2.375% medium-term senior notes due 2026 sold a week ago traded about 2 bps better early Tuesday and 4 bps better than where the paper priced.

The Markit CDX North American Investment Grade index opened the session 2 bps softer at a spread of 75 bps.

The three-month Libor yield was unchanged over the morning at 72 bps.

On Monday, $14.69 billion of investment-grade issues were traded, according to Trace.

Morgan Stanley better

Morgan Stanley’s 3.125% notes due 2026 (A3/BBB+/A) traded 2 bps tighter at 151 bps offered, according to a market source.

Morgan Stanley sold $3 billion of the notes on Wednesday at a spread of 163 bps over Treasuries.

The financial services company is based in New York City.

U.S. Bancorp improves

U.S. Bancorp’s 2.375% notes due 2026 traded about 2 bps tighter at 86 bps offered in the secondary market, a source said.

U.S. Bancorp sold $1.35 billion of the notes on July 19 at a spread of 90 bps over Treasuries.

The financial services holding company is based in Minneapolis.

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