Morning Commentary: Celgene, Senior Housing Properties Trust on tap; spreads weaken amid sell-off

By Cristal Cody

Tupelo, Miss., Feb. 8 – Some pricing action is expected in the high-grade bond market with one deal already priced and a couple of reported issuers marketing notes on Thursday.

The Federal Home Loan Bank System announced it priced $3 billion of two-year global notes early in the session.

Coming up, Celgene Corp. plans to price four tranches of senior notes.

Also, Senior Housing Properties Trust is offering 10-year senior notes.

Secondary market volume has been strong during the week. On Wednesday, $22.77 billion of investment-grade issues were traded, compared to $23.88 billion on Tuesday and $14.94 billion on Monday, according to Trace.

Investment-grade bond spreads have been mostly softer on the volatility in stocks, with spreads in the one- to three-year part of the curve widening another 2 basis points on Wednesday, on top of 3 bps to 7 bps widening on Tuesday on heavy selling pressure, according to a BofA Merrill Lynch analysts’ note released on Thursday.

“The $2.3 [billion] jump in dealer inventories of 1-3 year paper over the last two days shows that this spread widening is driven by investor selling,” the analysts said. “We continue to look for wider spreads in the front-end of the curve.”

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