High-grade deal volume quiet; credit spreads widen; Home Depot stronger; JPMorgan weak

By Cristal Cody

Tupelo, Miss., Feb. 5 – The high-grade primary market stayed quiet on Friday, bringing the week’s total deal volume to about $17 billion.

Traders focused early in the day on economic data, including the Labor Department’s January jobs report.

January employment rose by 151,000, less than the 190,000 forecast. The unemployment rate fell to 4.9% from 5% in December.

The volatile market conditions make it hard to forecast volume in the week ahead, according to informed sources.

“Crazy markets these days, but [there] seems to be a big backlog in the pipeline,” one source said. “If we get a few stable days, should be decent issuance.”

Credit spreads widened further on Friday. The Markit CDX North American Investment Grade index eased 6 basis points to close at a spread of 115 bps.

In the secondary market, Home Depot Inc.’s 3% senior notes due 2026 that priced on Wednesday remained tight as the session closed.

Bank and financial spreads are 30 bps wider on the year, according to a Barclays report on Friday.

“Going into the year, banks were viewed as a safe haven amid concerns about slower global growth; in that context, it is somewhat surprising that bank debt has come under so much pressure,” Barclays analysts said in the note.

Subordinated notes that JPMorgan Chase & Co. and Citigroup Inc. priced in late 2015 are trading more than 30 bps wider than issuance.

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