Morning Commentary: Deluge of investment-grade issuance on tap; Verizon softer in early trade

By Cristal Cody

Tupelo, Miss., Sept. 2 – High-grade issuers plan to kick off the month with a surge of new issuance, according to market sources early Tuesday.

Issuers including Wells Fargo & Co., Lloyds Banking Group plc, Packaging Corp. of America, Alleghany Corp., Plains All American Pipeline, LP and Marathon Petroleum Corp. are expected to tap the market over the session.

The Markit CDX North American Investment Grade series 22 index opened September at a spread of 57 basis points.

Secondary trading remains light, according to market sources.

“Primary and secondary trading volumes mark a new low for 2014,” RBC Capital Markets, LLC analysts said in a note on Tuesday. “The 10-day moving average for secondary trading volumes dropped to $9.5 billion last week making it the lowest volume week for the year. Also, new issue weekly volumes hit new 2014 lows ahead of the long weekend with a mere $6.05 billion in new supply.”

Verizon Communications Inc.’s bonds (Baa1/BBB+/A-) are active but opened 1 bp to 2 bps softer, a market source said.

Verizon eases

Verizon’s 4.5% notes due 2020 traded 2 bps softer at 109 bps offered, according to a market source.

Verizon sold $4 billion of the notes at Treasuries plus 215 bps in a $49 billion eight-part offering on Sept. 11, 2013.

The telecommunications company is based in New York City.

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