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Morning Commentary: BMO on tap; high-grade bond volume slows; Crown Castle mixed
By Cristal Cody
Tupelo, Miss., Jan. 31 – Investment-grade primary action opened Thursday’s session with one reported issuer marketing new bonds.
Bank of Montreal is offering U.S. dollar-denominated five-year senior medium-term notes.
Volume has slowed after heavy issuance at the start of the week with more than $15 billion of high-grade corporate bonds priced so far.
About $15 billion to $20 billion of new issuance was expected for the week by syndicate sources.
Bank and financial supply resumed this week with issuers including U.S. Bank NA and Fifth Third Bank in the primary market on Monday and Tuesday.
Volume cooled on Wednesday as attention turned to the Federal Reserve’s monetary policy meeting.
Investment-grade credit spreads tightened about 3 basis points in the previous session after the Federal Reserve left rates unchanged.
In the secondary market, new issues have traded mostly tighter this week, a source said.
Crown Castle International Corp.’s $1 billion of senior notes (Baa3/BBB-/BBB) that priced in two tranches on Tuesday were mixed in secondary trading on Friday.
The company’s 4.3% notes due Feb. 15, 2029 tightened to the 158 basis points area, a source said.
Crown Castle sold $600 million of the 10-year notes at a spread of 165 bps over Treasuries.
A $400 million tranche of 5.2% notes due Feb. 15, 2049 was flat to about 1 bp wider in secondary trading. The notes priced with a Treasuries plus 215 bps spread.
While primary action slowed, secondary trading volume has been strong this week. On Wednesday, $29.2 billion of high-grade bonds were traded, compared to $29.95 billion on Tuesday and $21.02 billion on Monday, according to Trace data.
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