Morning Commentary: Primary environment ‘enticing’; Verizon, Teva soften; Libor yield rises

By Cristal Cody

Eureka Springs, Ark., Aug. 1 – New investment-grade bonds traded mostly softer in the secondary market early Monday ahead of strong supply expected over the session.

About $25 billion to $30 billion of volume is forecast for the week.

The “pricing environment remains enticing,” RBC Capital Markets, LLC analysts said in a note on Monday.

Investment-grade spreads tightened 23 basis points over July, the analysts said.

In the secondary market, Verizon Communications Inc.’s 2.625% senior notes due 2026 eased about 2 bps to 3 bps.

Teva Pharmaceutical Finance Netherlands III BV’s 3.15% senior notes due 2026 traded about 2 bps weaker.

The three-month Libor yield was up 1 bp at 76 bps early Monday.

The Markit CDX North American Investment Grade index opened mostly unchanged at a spread of 73 bps.

On Friday, $13.9 billion of high-grade issues were traded, according to Trace.

Verizon eases

Verizon’s 2.625% notes due 2026 traded about 2 bps to 3 bps weaker at 117 bps offered in the secondary market, a source said.

The notes headed out on Friday at 116 bps bid, 114 bps offered.

Verizon sold $2.25 billion of the notes (Baa1//A-) on Wednesday at Treasuries plus 115 bps.

The telecommunications company is based in New York City.

Teva weakens

Teva’s 3.15% notes due 2026 were seen about 2 bps weaker at 143 bps offered, according to a market source.

The company sold $3.5 billion of the notes (Baa2/BBB) on July 18 at a spread of 160 bps over Treasuries.

The global pharmaceutical company is based in Jerusalem.

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