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Midday Commentary: High-grade credit spreads flat; Origin Energy, TransCanada Pipelines firm
By Cristal Cody
Tupelo, Miss., Oct. 3 - New Origin Energy Ltd. and TransCanada Pipelines Ltd. bonds traded better early Thursday as investment-grade credit spreads stayed mostly flat on the third day of the partial U.S. government shutdown, according to market sources.
"Credit spreads are opening marginally tighter this morning; however, corporate bonds are trading in a directionless manner as the U.S. government shutdown continues to irritate markets," RBC Capital Markets, LLC analysts said in a note.
The Markit CDX North American Investment Grade series 21 index, which closed unchanged on Wednesday at a spread of 80 basis points, is "barely up" in the morning session, a trader said.
"Spreads look to be unchanged," the trader said.
In the secondary market, Origin Energy's notes tightened about 7 bps since the issue priced late Wednesday, a trader said.
TransCanada Pipelines' new 10-year and 30-year notes (A3/A-/A) traded 1 bp to 2 bps tighter early Thursday.
Origin Energy tightens
Origin Energy's 4.5% notes due 2018 (Baa2/BBB/BBB+) tightened to 208 bps bid, 204 bps offered in secondary trading early Thursday, a trader said.
The company sold $800 million of the notes a spread of Treasuries plus 215 bps on Wednesday.
The coal-seam gas producer is based in Sydney.
TransCanada better
TransCanada Pipelines' 3.75% notes due 2023 firmed 2 bps since the issue priced on Wednesday to 118 bps bid, according to a trader.
The company sold $625 million of the 10-year notes at Treasuries plus 120 bps.
TransCanada Pipelines' 5% notes due 2043 tightened about 1 bp to 129 bps bid, 127 bps offered, the trader said.
The company sold $625 million of the 30-year notes at Treasuries plus 130 bps.
The natural gas and oil pipeline and storage company is based in Calgary, Alta.
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