Midday Commentary: Investment-grade bonds weak in morning session; Orange notes ease

By Cristal Cody

Tupelo, Miss., Jan. 31 - Investment-grade bond spreads opened slightly wider early Friday as stocks continue to take a hit in a risk-off trade over emerging market concerns, according to market sources.

"Bonds don't look too bad yet, a bit wider," a trader said.

In the secondary market, Orange SA's new 2.75% notes due 2019 eased 1 basis point from where the notes traded late Thursday but remain more than 5 bps tighter than issuance, according to a trader.

Verizon Communications Inc.'s $500 million issue of 5.9% $25-par notes due 2054 that priced at par on Thursday was not seen in secondary trading early Friday, a trader said. The notes are callable in 2019.

Verizon is a New York City-based telecommunications company.

Orange eases

Orange's 2.75% notes due 2019 (Baa1/BBB+/) traded at 117 bps bid, 114 bps offered over the morning on Friday, a trader said.

The notes were quoted late Thursday at 116 bps bid, 113 bps offered in the secondary market, a trader said.

Orange sold $750 million of the five-year notes with a spread of Treasuries plus 125 bps on Thursday as part of a $1.6 billion two-part offering of notes.

The telecommunications company is based in Paris.

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