Morning Commentary: High-grade primary quiets after light week; Union Pacific improves

By Cristal Cody

Tupelo, Miss., Jan. 31 – Investment-grade supply stayed quiet at the start of Friday’s session, capping a week of more than $10 billion of bond volume.

Supply fell short of initial market forecasts of about $20 billion to $25 billion of issuance for the week.

High-grade issuers stayed out of the primary market on Monday, while deal volume was light on Wednesday with market focus on the Federal Reserve’s monetary policy rate decision.

Deal volume has been led this week by Union Pacific Corp.’s $3 billion of registered fixed-rate senior notes (Baa1/A-) that priced in four tranches on Tuesday.

The company’s bonds were active in secondary trading early Friday and traded mostly better, a market source said.

Union Pacific’s 3.75% notes due Feb. 5, 2070 climbed to 102.58 by mid-morning from 101.80 on Thursday.

The Omaha-based railroad transportation company sold $750 million of the notes at 99.955 to yield 3.752% and a 165 basis points over Treasuries spread.

Secondary market volume this week has included $21.19 billion of bonds traded on Thursday, $23.23 billion on Wednesday, $21.59 billion on Tuesday and $18.12 billion on Monday, according to Trace data.

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