OeKB, International Finance price as primary pace slows; secondary spreads soften

By Aleesia Forni

Virginia Beach, Sept. 25 – The investment-grade primary market quieted on Thursday, with the bond market showing some signs of fatigue following the onslaught of supply this month.

The primary did see new deals price from Oesterreichische Kontrollbank AG (OeKB) and International Finance Corp. on Thursday.

OeKB came to market with $1 billion of 2.375% seven-year bonds priced in line with talk.

Meanwhile, International Finance sold $500 million of two-year global bonds during the session.

Roughly $26.6 billion of new issuance has hit the investment-grade primary market this week, topping what sources had predicted to be $20 billion to $25 billion of supply.

Looking forward, the session ahead is predicted to be a typically quiet Friday for the high-grade market.

“Not expecting much activity tomorrow,” a source said.

In the secondary market, spreads were weaker overall on Thursday, widening around 3 bps to 5 bps, a trader said.

“Light activity,” he added.

The Markit CDX North American Investment Grade series 22 index was 3 bps wider at a spread of 62 bps.

Ensco plc’s new $1.25 billion two-part offering of senior notes, which priced on Wednesday, traded better during the session.

OeKB sells $1 billion

Oesterreichische Kontrollbank sold $1 billion of 2.375% bonds (Aaa/AA+/) due Oct. 1, 2021 at mid-swaps plus 7 bps, or Treasuries plus 17.05 bps, according to an informed source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.974.

The notes were sold in line with talk, which was set in the area of mid-swaps plus 7 bps.

Barclays, Citigroup Global Markets Inc., Deutsche Bank AG, London Branch and J.P. Morgan Securities were the bookrunners.

The notes are guaranteed by the Republic of Austria.

The export and financial services company for Austrian businesses is based in Vienna.

International Finance prices

International Finance sold $500 million of 0.625% two-year global bonds at mid-swaps minus 13 bps on Thursday, according to an informed source.

Price talk was set in the mid-swaps minus 12 bps area.

The notes (Aaa/AAA/) priced at 99.911 to yield 0.67%.

Citigroup and Goldman Sachs & Co. are the banks on the deal.

The World Bank member and lender to the private sector in developing countries is based in Washington, D.C.

Ensco firms

Ensco’s new $1.25 billion of senior notes traded better during the session, a trader said.

The $625 million of 4.5% 10-year notes, which priced at Treasuries plus 195 bps, traded 2 bps tighter at 192 bps bid, 190 bps offered.

The $625 million of 5.75% 30-year bonds traded flat from Thursday’s close at 247 bps bid.

The notes priced at Treasuries plus 250 bps.

The oil and gas services company is based in London.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices were higher on Thursday, according to a market source.

Bank of America Corp.’s CDS costs rose 3 bps to 70 bps bid, 73 bps offered. Citigroup Inc.’s CDS costs were 4 bps higher at 70 bps bid, 73 bps offered. JPMorgan Chase & Co.’s CDS costs were 3 bps higher at 60 bps bid, 63 bps offered. Wells Fargo & Co.’s CDS costs ended 1 bp higher at 44 bps bid, 49 bps offered.

Merrill Lynch’s CDS costs were 3 bps higher at 72 bps bid, 75 bps offered. Morgan Stanley’s CDS costs rose 3 bps to 78 bps bid, 83 bps offered. Goldman Sachs Group, Inc.’s CDS costs increased 2 bps to 79 bps bid, 82 bps offered.

Stephanie N. Rotondo contributed to this review

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