Market tone positive following Fed rate hike; Oracle tightens; AT&T mixed

By Aleesia Forni and Cristal Cody

New York, Dec. 16 - Investment-grade bonds were better on Wednesday as the Federal Reserve raised interest rates for the first time in nearly a decade, signaling confidence in the U.S. economy.

Following the conclusion of its two-day policy meeting, the Federal Open Market Committee voted unanimously to hike its key interest rate from a range of 0% to 0.25% to a range of 0.25% to 0.5%, a move that was widely expected.

The Fed added that any further rate increases would come gradually.

The typically quiet FOMC statement day, coupled with the late-year holiday lull, kept primary activity at bay during the session.

Still, the market reacted positively to the statement, a market source said, with credit spreads tightening modestly following the announcement after making a volatile start to the week.

But the positive tone is unlikely to be enough to persuade any opportunistic issuer to price a new offering prior to the end of the year.

Oracle Corp.’s senior notes (A1/AA-/A+) firmed 1 bp to 4 bps ahead of the release of the company’s fiscal second quarter earnings results after the market closed.

AT&T Inc.’s notes (/BBB+/A-) traded flat to tighter over the day.

Citigroup Inc.’s 2.65% notes due 2020 were unchanged in secondary trading.

JPMorgan Chase & Co.’s 3.9% senior holding company notes due 2025 tightened 3 bps.

The Markit CDX North American Investment Grade 25 index firmed 1 bp to close at a spread of 89 bps.

Oracle bonds firm

Oracle’s 2.95% notes due 2025 headed out 4 bps better at 113 bps bid in the secondary market, a source said.

Oracle sold $2.5 billion of the notes on April 28 at a spread of 100 bps over Treasuries.

Oracle’s 4.125% bonds due 2045 improved about 1 bp to 154 bps bid.

Oracle sold $2 billion of the bonds in the April 28 offering at Treasuries plus 145 bps.

The computer software and technology company is based in Redwood City, Calif.

AT&T flat to tighter

AT&T’s 3.4% notes due 2025 headed out unchanged at 168 bps bid after tightening 4 bps earlier in the day to 170 bps offered, a market source said.

The company sold $5 billion of the notes on April 23 at 150 bps over Treasuries.

AT&T’s 4.75% bonds due 2046 traded 4 bps tighter late afternoon at 230 bps bid.

AT&T sold $3.5 billion of the bonds in the April 23 offering at Treasuries plus 215 bps.

The telecommunications company is based in Dallas.

Citigroup stable

Citigroup’s 2.65% notes due 2020 were unchanged on Wednesday at 119 bps bid, a market source said.

Citigroup sold $2.7 billion of the notes (Baa1/A-/A) on Oct. 19 at a spread of 133 bps plus Treasuries.

The financial services company is based in New York.

JPMorgan improves

JPMorgan Chase’s 3.9% notes due 2025 traded 3 bps tighter during the session at 138 bps bid, a source said.

JPMorgan Chase sold $2.5 billion of the notes (A3/A/A+) on July 14 at 155 bps over Treasuries.

The financial services company is based in New York City.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.