Primary continues headline watch; secondary sees thin trading; JPMorgan top IG underwriter for year

By Andrea Heisinger

New York, Sept. 30 - It was a quiet end to September as the investment-grade credit market dealt with a variety of factors.

The month saw about $25.32 billion in new issues, which was a decrease from the $33.57 billion in August, according to data compiled by Prospect News.

The secondary market saw little trading for the second day in a row, with the only activity taking place in the financial sector.

Primary waits it out

The negative market conditions continued to prevent any new issues in the investment-grade primary Tuesday, as there was more headline watching and waiting.

The Jewish holiday Rosh Hashana meant many were off for the day, coupled with the continuing drama of the government's bailout bill.

"Absolutely nothing happened today," a source confirmed. "Not a thing. People are just taking it one day at a time and seeing how the market feels. Everyone's just watching for the next news."

The headline watching took a brief hiatus last week, only to return Monday after the bailout bill was voted down in the House of Representatives.

A Senate vote is expected in the next day or two on a revised bailout plan, and it's unclear whether the second House vote will happen before or after.

The revised bill is largely expected to pass in the Senate, and points of contention in the House are being worked on.

Among revision ideas being tossed around are an increase in Federal bank deposit insurance amounts and an extension of jobless benefits.

It is hoped that the bill can be revised enough so those who opposed it during the first vote can be convinced to vote for it the second time.

On Tuesday, president George Bush again pleaded with members of Congress to pass the bill to avoid further damage to the markets and economy.

The effects of the bill's failure were also being felt in other countries.

Credit markets remained tight on Tuesday, and the Dow Jones Industrial Average rebounded after its historic drop of more than 770 points at the close Monday.

Sources were unwilling or unable to venture a guess as to what October will bring, only offering that it can't get much worse.

A backlog has been building throughout September, and any window of good market conditions will likely mean issuers that have been waiting since August to price a deal will jump at the chance if they can afford the high new issue premiums.

JPMorgan tops league table

J.P. Morgan Securities Inc. swept the league table lists at the end of September, as the top underwriter for the month, the third quarter and year to date.

The company has underwritten $87.47 billion of deals so far in 2008 and did $14.62 billion for the quarter.

In September, the company topped the list with $4.84 billion.

Apache bonds unchanged

The two tranches of notes issued Friday by Apache Corp. were seen mostly unchanged Tuesday, a source said.

There were no trading levels for the 6% notes due 2013 that priced at Treasuries plus 310 basis points, he said, while the 6.9% notes due 2018 were at 310 bps bid, 305 bps offered.

Secondary trading thin

A combination of factors left the secondary market looking thin again, a source said.

"You have the [Jewish] holiday, month end, quarter end, and the unresolved issues in Washington," he said.

This all left trading "very, very quiet," he said.

Banks mixed, brokers tighten

Bank names were seen generically between 10 bps wider to 40 bps tighter, a trader said Tuesday afternoon.

Brokers were anywhere from 20 bps to 40 bps tighter, he said.

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