Primary stays quiet despite upswing in tone; Citigroup, JPMorgan, Goldman weak

By Aleesia Forni and Cristal Cody

New York, Feb. 12 – The tone of the high-grade bond market improved on Friday, though that was not enough to persuade any issuers to access the primary.

The empty session closed out a week that saw around $865 million of new issuance from just two issuers, Landwirtschaftliche Rentenbank and Ford Motor Credit Co. LLC.

The final tally is a far cry from what was predicted to be around $10 billion to $15 billion of supply, with volatile market conditions keeping a majority of issuers on the sidelines.

Meantime, Lipper US Fund Flows reported $55 million of inflows into corporate investment-grade bond funds for the week ended Feb. 10.

This follows the $1.45 billion of outflows for the week ended Feb. 3 and brings the total year-to-date outflows to about $4.3 billion.

With ongoing market volatility a significant factor, ranges for new investment-grade issuance in the week ahead vary from $5 billion to around $15 billion.

One source noted that he expected the majority of issuers to hold off until at least the latter part of the holiday-shortened week ahead.

Investment-grade bank and financial paper traded mostly wider over the day, while credit spreads improved.

Deutsche Bank AG’s 4.1% notes due 2026 priced in January were quoted on Friday trading 100 basis points wider than issuance. The bonds were active in secondary trading at the start of the day after Deutsche Bank announced a tender offer to purchase $2 billion of dollar-denominated senior notes and €3 billion of euro-denominated notes.

Citigroup Inc.’s 3.7% subordinated notes due 2026 widened 4 bps on Friday.

Visa Inc.’s senior notes (A1/A+) traded about 1 bp softer over the day.

The Markit CDX North American Investment Grade index firmed 3 bps to a spread of 122 bps.

Citi paper widens

Citigroup’s 3.7% notes due 2026 traded 4 bps weaker on Friday at 194 bps bid, according to a market source.

The notes were quoted softer at the start of the day at 190 bps offered.

Citigroup sold $2 billion of the notes (Baa1/BBB+/A) on Jan. 5 at a spread of Treasuries plus 148 bps.

The financial services company is based in New York.

Visa eases

Visa’s 3.15% notes due 2025 eased 1 bp to 114 bps bid in late afternoon secondary trading, a market source said.

The notes were quoted softer earlier in the day at 111 bps offered.

The company sold $4 billion of the bonds on Dec. 9 at Treasuries plus 97 bps.

The retail electronic payments network operator is based in San Francisco.

JPMorgan widens

JPMorgan Chase & Co.’s 4.25% subordinated bonds due 2027 traded 7 bps wider on Friday at 278 bps bid, a market source said.

JPMorgan Chase sold $2 billion of the bonds (Baa1/A-/A) on Sept. 23 at a spread of Treasuries plus 215 bps.

The financial services company is based in New York City.

Goldman eases

Goldman Sachs Group Inc.’s 4.25% subordinated notes due 2025 widened to 289 bps bid over Friday’s session from 274 bps bid the previous day, according to a market source.

Goldman Sachs sold $2 billion of the notes (Baa2/BBB+/A-) on Oct. 16 at 230 bps plus Treasuries.

The financial services company is based in New York City.

Morgan Stanley eases

Morgan Stanley’s 3.875% senior notes due 2026 widened about 14 bps during the day to 211 bps bid, a market source said.

Morgan Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at 185 bps plus Treasuries.

The financial services company is based in New York City.

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