High-grade issuers take break; Fed keeps rates unchanged; credit spreads tighten; bonds firm

By Cristal Cody

Tupelo, Miss., Jan. 30 – The high-grade bond market stayed quiet over Wednesday’s session as attention turned to the Federal’s Reserve’s monetary policy meeting.

No reported corporate or sovereign, supranational and agency issuers priced bonds over the session, sources said.

Investment-grade issuers already brought more than $15 billion of bonds to the primary market on Monday and Tuesday, compared to the $15 billion to $20 billion of supply forecast for the entire week.

The Federal Reserve kept the federal funds rate unchanged.

In a statement following the end of the Federal Open Market Committee central bank monetary policy meeting on Wednesday, the Fed said that since its last meeting in December, the labor market continues to strengthen and economic activity has risen at a solid rate.

“In light of global economic and financial developments and muted inflation pressures, the committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate,” the statement said. “In determining the timing and size of future adjustments to the target range for the federal funds rate, the committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective.”

The Markit CDX North American Investment Grade 31 index tightened about 3 basis points on the day to head out at a spread of 70 bps.

In the secondary market, investment-grade bonds have traded mostly better this week.

New issues also are mostly tighter in secondary trading.

GATX Corp.’s 4.7% senior notes due April 1, 2029 priced on Tuesday tightened about 3 bps.

Charter Communications, Inc.’s 5.05% senior secured notes due March 30, 2029 priced earlier in January were unchanged but steady at about 10 bps tighter than issuance.

Wells Fargo & Co.’s 4.15% medium-term notes due Jan. 24, 2029 were flat but quoted nearly 20 bps better than where the paper came in mid-January.

GATX firms

GATX’s 4.7% senior notes due April 1, 2029 priced on Tuesday tightened to the 197 bps area, a market source said.

The company sold $500 million of the notes (Baa2/BBB/) at a spread of 200 bps over Treasuries.

GATX is a transportation leasing company based in Chicago.

Charter steady

Charter’s 5.05% senior secured notes due March 30, 2029 (Ba1/BBB-/BBB-) were unchanged during the session at 225 bps bid, a market source said.

Charter subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. sold $1.25 billion of the notes on Jan. 14 at a spread of Treasuries plus 235 bps.

Charter is a Stamford, Conn.-based broadband communications company.

Wells Fargo stable

Wells Fargo’s 4.15% medium-term notes due Jan. 24, 2029 (A2/A-/A+) headed out on Wednesday flat at 127 bps bid, according to a market source.

The $2.5 billion tranche of 10-year notes priced at a spread of Treasuries plus 145 bps on Jan. 16.

The financial services company is based in San Francisco.

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