Morning Commentary: High-grade corporate supply likely finished for year; Nasdaq soft

By Cristal Cody

Tupelo, Miss., Dec. 22 – The high-grade primary market is likely shut for the remainder of the year with no issuers expected on Tuesday.

No issuers were reported on Monday.

Deal volume has thinned headed into the holidays and year’s close with just $2.28 billion of bonds priced in three deals last week.

Month to date, more than $42 billion of investment-grade bonds have priced, surpassing market forecasts of about $25 billion to $35 billion of supply in December.

Looking ahead to January, about $125 billion to $135 billion of high-grade supply is expected, sources said.

Market tone was mixed over the morning following reports Congress passed a second $900 billion Covid-19 stimulus bill on Monday with the proposal headed to President Trump for approval. The bill includes up to $600 direct paychecks for Americans who earn up to $75,000, as well as additional paycheck protection funding for small businesses.

The S&P 500 index and the Dow Jones industrial average were edging 0.9% and 0.42% lower, while the Nasdaq was up a modest 0.36% in early trading.

In the high-grade space, the PIMCO Investment Grade Corporate Bond index improved 0.15% to $116.59.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 0.14% to $137.08.

Looking at the secondary bond market, high-grade corporate trading volume thinned to $11.49 billion on Monday, compared to $20.87 billion in the same session a week ago, according to Trace.

Nasdaq, Inc.’s 1.65% senior notes due Jan. 15, 2031 (Baa2/BBB) that priced on Dec. 7 softened in secondary trading to 99 on Monday with thin trading seen early Tuesday, according to a market source.

Nasdaq priced $650 million of the notes at 99.667 to yield 1.686%, or a spread of 75 basis points over Treasuries. Initial price talk was at the 110 bps over Treasuries area.

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