Primary lull continues; Verizon notes tighten over session; Time Warner Cable flat

By Cristal Cody and Aleesia Forni

Virginia Beach, Dec. 23 - The primary market was empty again on Monday, with no new issues hitting the high-grade market to kick off the holiday-shortened week.

"Desks are thinly staffed," one market source said. "It's dead around here."

Sources continue to expect the lack of primary activity in the investment-grade bond market to continue for the remainder of the year.

In the secondary market, bond spreads tightened in light action over the session, according to market sources. Desks are expected to be lightly staffed through the New Year holiday, sources said.

"Nothing, absolutely nothing," one trader said of the day's activity.

The Markit CDX North American Investment Grade series 21 index tightened 2 basis points to a spread of 63 bps on Monday.

In the secondary market, Verizon Communications Inc.'s bonds (Baa1/BBB+/A-) continued the rally from the previous week, a trader said.

Time Warner Cable Inc.'s bonds traded mostly unchanged on the day but nearly 20 bps tighter from a week ago, according to a trader.

Verizon better

In light trading on Monday, Verizon's 5.15% notes due 2023 tightened 2 bps over the day, a trader said.

The notes headed out at 107.313 bid, 107.681 offered and a spread of 129 bps bid, 125 bps offered. The issue was quoted earlier Monday at 131 bps bid.

The 10-year notes have tightened about 13 bps from a week ago, according to market sources.

Verizon sold $11 billion of the 10-year notes at 99.676 to yield 5.192%, or a spread of Treasuries plus 225 bps, on Sept. 11.

The company's tranche of 6.55% bonds due 2043 headed out at 117.275 bid, 118.399 offered, the trader said. The bonds traded late in the day at 150 bps bid, 146 bps offered, 7 bps better than where the issue traded on Wednesday.

Verizon sold $15 billion of the 30-year bonds at 99.883 to yield 6.559%, or Treasuries plus 265 bps, as part of the company's record $49 billion eight-tranche debt offering sold in September.

The telecommunications company is based in New York City.

Time Warner Cable firms

Time Warner Cable's 4% notes due 2021 (Baa2/BBB/BBB) traded mostly flat at 227 bps bid, 220 bps offered, a trader said.

The notes have tightened over the month, from 245 bps bid, 235 bps offered on Dec. 16 and 270 bps bid, 260 bps offered on Dec. 9, according to traders.

Time Warner Cable's bonds have been among the most active investment-grade issues in the secondary market in December from speculation that Comcast Corp. and Charter Communications Inc. are considering a takeover bid, sources said.

Time Warner Cable sold $1 billion of the notes at a spread of 210 bps over Treasuries in 2011.

The broadband communications company is based in New York City.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 75 bps bid, 80 bps offered. Citigroup Inc.'s CDS costs declined 1 bp to 69 bps bid, 74 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 65 bps bid, 70 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 38 bps bid, 43 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 77 bps bid, 84 bps offered. Morgan Stanley's CDS costs were flat at 86 bps bid, 91 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended unchanged at 90 bps bid, 95 bps offered.

Paul Deckelman contributed to this review.

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