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.

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