RBC, Rolls-Royce price following IMF growth forecast cut; PepsiCo tightens on earnings

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 6 – High-grade bond market primary activity remained slow on Tuesday during another session hampered by concerns over economic expansion, as the International Monetary Fund cut its growth forecasts for both 2015 and 2016.

The IMF revised its projections for global growth to 3.1% from an earlier forecast of 3.3% and predicts growth for the year ahead at 3.6% following an earlier prediction of 3.8%.

In primary happenings, the session saw new deals price from Rolls-Royce plc and Royal Bank of Canada.

Following Friday’s weak employment data, investment-grade primary activity has remained subdued so far, despite what one source called a “significant” pipeline.

A softer market backdrop this week, coupled with earnings blackouts, had kept earlier predictions for supply at around $15 billion, and sources are calling for a light calendar on Wednesday.

“Really depends on the [market] tone,” one source said of possible primary activity in the coming sessions.

PepsiCo Inc.’s 2.75% senior notes due 2025 tightened 10 bps in secondary trading on Tuesday after the company reported better-than-expected third-quarter earnings and raised its profit outlook for the year.

AT&T Inc.’s bonds (/BBB+/A-) were mixed in the secondary market.

The Markit CDX North American Investment Grade 25 index firmed 1 bp to end at a spread of 87 bps on Tuesday.

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