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Morning Commentary: New Apple, IBM notes tighten in secondary market; credit spreads improve
By Cristal Cody
Tupelo, Miss., Feb. 18 – New investment-grade bonds priced over the week traded stronger in the secondary market early Thursday, and credit spreads opened the session 3 basis points tighter.
Apple Inc.’s $12 billion nine-part issue of senior notes (Aa1/AA+) that was brought to market on Tuesday traded about 8 bps to 15 bps better in the secondary market.
International Business Machines Corp.’s senior notes (Aa3/A-/A+) that priced on Tuesday firmed about 1 bp to 5 bps in the secondary market.
The Markit CDX North American Investment Grade index opened the day 3 bps tighter at a spread of 115 bps.
The three-month Libor yield was stable at 62 bps.
Secondary trading volume jumped to $18.81 billion on Wednesday, up from nearly $13 billion of investment-grade bonds traded on Tuesday, according to Trace.
Apple stronger
Apple’s 3.25% note due 2026 tightened to 140 bps offered in the secondary market, a source said.
Apple priced $2 billion of the notes on Tuesday at a spread of 150 bps over Treasuries.
The company’s 4.65% bonds due 2046 were stronger in early secondary trading at 197 bps offered.
Apple sold $2.5 billion of the bonds in Tuesday’s sale at Treasuries plus 205 bps.
The computer and mobile communications device company is based in Cupertino, Calif.
IBM firms
IBM’s 3.45% notes due 2026 traded about 1 bp tighter at 169 bps offered in the secondary market, a source said.
The company sold $1.35 billion of the 10-year notes on Tuesday at 170 bps over Treasuries.
IBM’s 4.7% bonds due 2046 were quoted tighter in secondary trading at 205 bps offered.
The bonds priced on Tuesday in a $650 million tranche at Treasuries plus 210 bps.
The information technology and computer company is based in Armonk, N.Y.
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