High grade desks look at upcoming deals; Nationwide gains in trading, financials better again

By Andrea Heisinger and Cristal Cody

New York, Feb. 19 - The high-grade bond market went back to its recent boring state on Friday, following a day where three deals were rushed to price.

The momentum could not keep going to end a short week with very little activity.

"It should pick up," a market source said of the coming week. "I don't know of anything specific, but there's still stuff out there."

One source expressed relief that the week was over, and hoped that the coming week would be more fruitful.

It was unclear if there were any changes to tone in the market by the end of the day, sources said, due to the lack of deals to go off.

Secondary trading hit a lull on Friday, but some paper continued to firm over the day, according to sources.

"Volume looks to be on the lowish side," a source said.

Overall Trace volume dropped about 29% to about $9.8 billion, according to a market source.

Meanwhile, the financial sector tightened overall by about another 5 bps after two days of strong gains, with Bank of America Corp., Prudential Financial, Inc. and others firming, a trader said.

In addition, Nationwide Building Society's new notes tightened in the secondary, one source said.

Also on Friday, the CDX Series 13 North American high-grade index firmed 2 bps to a mid bid-asked spread level of 91 bps, according to a market source.

Treasuries, meanwhile, were stronger on Friday. The yield on the 10-year benchmark Treasury note firmed 3 bps to 3.77%, while the yield on the 30-year Treasury bond was seen at 4.70% from 4.73% the day before.

New deals to return

Bond offerings are expected to make a return to the high-grade market in the coming couple of weeks, sources said on Friday.

One syndicate source at a smaller desk said they had "two or three deals that are for sure coming next week."

At the end of the previous week, sources reported that they had deals on the calendar, but as the week progressed and spreads and market tone remained unfavorable, those issuers didn't materialize.

A source at a larger desk said that he too, had a "bunch of stuff in the next week or two." He added that he wasn't sure when exactly those deals would come to the market, adding that it depended on the issuer.

The first syndicate source said he was sure this time that there "would be something to work on" in the coming week.

"We're all getting bored," he said of the lack of bond sales.

Nationwide tightens

On Friday, the new notes priced a day earlier from Nationwide Building Society were seen tightening in secondary trading, according to a source.

The $700 million of 4.65% notes due 2015, which priced at Treasuries plus 225 bps, firmed to 220 bps late in the day, the source said.

Also, Nationwide Building's $800 million of 6.25% notes due 2020, which priced at Treasuries plus 250 bps, firmed in trading. On Friday, the notes were seen at 249 bps bid, 245 bps offered.

The banking and financial services company is based in Swindon, England.

Financials on a roll

Meanwhile, the financial sector struck a third day of gains, sources said.

"It did look like financials continued to tighten 5-10 bps," a trader said.

For example, Bank of America's 4.875% notes due 2013 were 5 bps tighter.

Also, the Charlotte, N.C.-based bank's 7.625% notes maturing 2019 ended tighter at 207 bps from 212 bps on Thursday, according to a source.

Meanwhile, Morgan Stanley's 5.30% notes due 2013 traded 5 bps firmer. Newark, N.J.-based Prudential Financials 6% notes due 2017 also were 5 bps tighter, a trader said.

Gaining traction on Friday, JPMorgan Chase & Co.'s 6% notes due 2017 moved 7 bps tighter, a source said. Also, the New York financial services company's 7.25% notes due 2018 were 4 bps tighter by late in the day.

Elsewhere in the sector, New York-based American Express Co.'s 6% notes due 2017 were seen 5 bps tighter by a trader.

"So it seems all the financials continued to do well today," the trader said.

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