Primary market subdued as market focuses on Fed; Alcoa, IADB price; RBC notes firm

By Aleesia Forni

Virginia Beach, Sept. 17 – Inter-American Development Bank and Alcoa Inc. sold new bond offerings on Wednesday, while other issuers kept to the sidelines as the market focused on the Federal Open Market Committee’s statement.

The Federal Reserve wrapped up its two-day policy meeting Wednesday, announcing that it plans to continue its accommodative policies for a “considerable time.”

In primary action, Alcoa came to market with a split-rated $1.25 billion issue of 10-year senior notes, pricing in line with talk.

There was also a $500 million offering of four-year notes from Inter-American Development Bank.

Around $14 billion of supply has priced in the high-grade primary this week.

With another slow day expected Thursday, the week’s issuance is likely to fall short of what sources had expected to be $20 billion to $25 billion.

High-grade corporate bond spreads were mostly unchanged to slightly tighter on Wednesday amidst light activity with all eyes on the Fed.

The Markit CDX North American Investment Grade series 22 index was 1 basis point tighter at a spread of 59 bps.

Royal Bank of Canada’s new $1.75 billion 2.2% five-year covered bond traded around 1 bp better in the secondary market, a trader said.

The issue was quoted at 42 bps bid.

The notes (expected: Aaa/AAA/AAA) priced with a spread of Treasuries plus 43.7 bps, or mid-swaps plus 27 bps, on Wednesday.

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