Morning Commentary: High-grade inflows up; secondary active; Bank of Montreal firms

By Cristal Cody

Tupelo, Miss., Feb. 1 – The high-grade primary market stayed quiet at the start of Friday’s session following more than $17 billion of supply over the week.

About $15 billion to $20 billion of new bond issuance was expected for the week by syndicate sources.

Elsewhere, inflows to fixed income climbed to $5.26 billion for the week ended Jan. 30 from $1.93 billion in the prior week, “with stronger flows across all major sectors except global EM bonds,” Yuri Seliger, a strategist with BofA Merrill Lynch, said in a research note released on Friday.

Net buying of high-grade bonds climbed to $1.91 billion for the week ended Jan. 30 from $1.32 billion in the prior week, Seliger said.

Short-term high-grade bond purchases also improved to $540 million from $140 million in the previous week, and buying excluding short-term high-grade bonds rose to $1.37 billion from $1.18 billion in the prior week.

Inflows to high-grade funds, which include corporate, Treasuries, agencies and mortgages, rose to $1.35 billion in the week ended Wednesday from $450 million in the previous week, Seliger said.

Meanwhile, secondary trading has been heavy this week and soared on Thursday with $34.2 billion of investment-grade issues traded, Trace data shows. On Wednesday, $29.2 billion of high-grade bonds were traded, compared to $29.95 billion on Tuesday and $21.02 billion on Monday.

Bank and financial issuance resumed in 2019 this week with new paper from issuers including UBS Group Funding (Switzerland) AG, U.S. Bank NA, Fifth Third Bank, Credit Suisse AG, New York Branch and Bank of Montreal.

Bank of Montreal’s $1.75 billion of 3.3% senior medium-term notes due Feb. 5, 2024 (Aa2/A-/AA-) that priced on Thursday tightened about 4 basis points in aftermarket trading, a source said.

The notes were priced at a spread of Treasuries plus 92 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.