Morning Commentary: High-grade primary quiet after heavy supply; Pacific Gas improves

By Cristal Cody

Tupelo, Miss., Nov. 30 – The high-grade bond market quieted on Friday following heavier-than-expected issuance over the week.

Primary action was quiet with no reported issuers marketing bonds.

More than $30 billion of high-grade notes have priced week to date, higher than market forecasts of about $10 billion to $20 billion of expected issuance.

Volume was led on Thursday by deals from issuers including British Telecommunications plc, Bank of New York Mellon and BB&T Corp.

Trading volume also has been strong in the secondary market week to date. On Thursday, $21.67 billion of investment-grade issues were traded, compared to $25.08 billion on Wednesday, $21.41 billion on Tuesday and $21.38 billion on Monday, according to Trace.

Pacific Gas & Electric Co.’s senior notes traded slightly better at the start of Friday’s session. The notes softened earlier in November after the company’s power lines were linked to the California Camp Fire, and its bonds were downgraded.

Pacific Gas & Electric’s 4.25% notes due Aug. 6, 2023 traded early Friday at 92.75, according to a market source.

The notes were quoted on Thursday going out at 92 bid, slightly up from the 91.623 bid area.

The notes have improved since the issue dropped to the 89 area from 99.51 on Nov. 15.

Pacific Gas & Electric (Baa2/BBB-/BBB-) sold $500 million of the notes on Aug. 2 at 99.76 to yield 4.3% and a spread of 145 basis points over Treasuries.

The electric and natural gas utility is based in San Francisco.

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