Investment-grade bonds falter following Fed decision; Oracle, Citigroup bonds tighten

By Aleesia Forni and Cristal Cody

New York, Dec. 17 – Investment-grade bonds lost some of their earlier gains on Thursday, while the primary market was again empty of any new issuance.

The market was weaker following a mostly positive Wednesday session and the Federal Reserve’s decision to increase interest rates by 25 basis points.

Oil prices continued to tumble, falling below $35 per barrel during the session.

Thursday’s empty primary session marks the fifth-straight day with no new deals entering the high-grade market.

Sources had noted the possibility of up to $5 billion of new issuance.

However, the lack of activity this week does not come as too much of a surprise, in light of the slowdown as the market heads into the end of the year and the focus on the Federal Open Market Committee meeting mid-week.

Investment-grade bonds were mixed in the secondary market on Thursday, and credit spreads widened on the day.

Oracle Corp.’s 2.95% senior notes due 2025 tightened over the session.

Citigroup Inc.’s 4.45% subordinated notes due 2027 recovered earlier losses and firmed 15 bps.

Morgan Stanley’s 4% senior notes due 2025 tightened 2 bps in secondary trading.

JPMorgan Chase & Co.’s 4.25% subordinated notes due 2027 headed out 2 bps softer.

Goldman Sachs Group Inc.’s 4.25% subordinated notes due 2025 were unchanged.

The Markit CDX North American Investment Grade 25 index widened 4 bps to end at a spread of 93 bps.

Oracle trades better

Oracle’s 2.95% notes due 2025 traded tighter at 104 bps bid late afternoon from 113 bps bid on Wednesday, according to a market source.

The notes were 5 bps tighter at the start of the day at 103 bps offered.

Oracle sold $2.5 billion of the bonds (A1/AA-/A+) on April 28, 2015 at 100 bps over Treasuries.

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

Citigroup tightens

Citigroup’s 4.45% subordinated notes due 2027 tightened 15 bps in secondary trading to 225 bps bid, according to a market source.

Citigroup sold $1.5 billion of the notes (Baa3/ BBB+/A-) in an Oct. 23 add-on at a spread of 233 bps over Treasuries. The $2 billion tranche originally priced on Sept. 23 at Treasuries plus 235 bps.

The financial services company is based in New York.

Morgan Stanley firms

Morgan Stanley’s 4% notes due 2025 firmed 2 bps on Thursday to 147 bps bid, a market source said.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

JPMorgan eases

JPMorgan Chase’s 4.25% subordinated bonds due 2027 eased 2 bps during the session to 210 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 unchanged

Goldman’s 4.25% subordinated notes due 2025 were unchanged on the day at 217 bps bid, according to a market source.

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

The financial services company is based in New York City.

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