Primary pauses as market focuses on payrolls data; telecom bonds improve in secondary trade

By Cristal Cody and Aleesia Forni

Virginia Beach, June 6 – The high-grade market was muted to close out yet another busy week of issuance, with the market’s focus set firmly on the release of Friday’s nonfarm payrolls data.

The Labor Department reported that the U.S. economy added 217,000 jobs during the Monday of May, compared to expectations of 215,000.

The unemployment rate was unchanged at 6.3%.

More than $30 billion of high-grade paper priced during the week, according to data compiled by Prospect News.

This figure easily topped expectations of around $20 billion of supply for the first full week of June.

In other market news, Lipper reported $261.4 million of inflows into corporate investment-grade funds for the week ended May 21, down from last week’s inflows of $690 million.

This brings the year-to-date figure to roughly $39.3 billion.

Though not quite as busy as this week, sources are expecting another active week for the high-grade primary ahead.

“Thinking around $20 [billion] to $25 [billion],” one source said on Friday.

High-grade bonds continued to trade tighter over the session, sources said.

The Markit CDX North American Investment Grade series 22 index firmed 3 basis points to a spread of 57 bps on Friday.

AT&T Inc.’s 4.8% global notes due 2044 traded better than where the issue priced on Tuesday, a trader said.

Verizon Communications Inc.’s 1.35% notes due 2017 tightened on the offered side in the secondary market, according to a source.

International Paper Co.’s 3.65% senior notes due 2024 traded about 1 bp tighter than issuance, according to a trader.

AT&T firms

AT&T’s 4.8% notes due 2044 (A3/A-/A) headed out on Friday at 136 bps bid, 133 bps offered, a trader said.

The notes were seen at 100.41, down from 102.64 on Thursday, according to a market source.

AT&T sold $2 billion of the 30-year notes at 99.636 to yield 4.823%, or a spread of Treasuries plus 140 bps, on Tuesday.

The telecommunications company is based in Dallas.

Verizon tightens

Verizon’s 1.35% notes due 2017 (Baa1/BBB+/A-) traded late afternoon at 45 bps offered, a trader said.

The notes closed lower at 100.19 from 100.32 on Thursday, according to a market source.

The company sold $2 billion of the notes on Wednesday at 99.95 to yield 1.356%, or Treasuries plus 53 bps.

The telecommunications company is based in New York City.

International Paper mostly flat

International Paper’s 3.65% notes due 2024 (Baa2/BBB/) firmed to 109 bps bid, 107 bps offered, a trader said on Friday.

The notes traded slightly lower in price at 99.78 from 99.84 on Thursday, according to a market source.

International Paper sold $800 million of the notes on Tuesday at 99.626 to yield 3.695%, or Treasuries plus 110 bps.

The paper and packaging manufacturing and distributing company is based in Memphis.

Bank/brokerage CDS costs flat to lower

Investment-grade bank and brokerage CDS prices were lower on Friday, according to a market source.

Bank of America Corp.’s CDS costs declined 5 bps to 56 bps bid, 59 bps offered. Citigroup Inc.’s CDS costs also declined 5 bps to 47 bps bid, 60 bps offered. JPMorgan Chase & Co.’s CDS costs were down 3 bps at 47 bps bid, 50 bps offered. Wells Fargo & Co.’s CDS costs ended 1 bp lower at 32 bps bid, 35 bps offered.

Merrill Lynch’s CDS costs declined 5 bps to 60 bps bid, 64 bps offered. Morgan Stanley’s CDS costs ended 6 bps lower at 59 bps bid, 62 bps offered. Goldman Sachs Group, Inc.’s CDS costs declined 7 bps to 64 bps bid, 67 bps offered.

Stephanie Rotondo contributed to this review

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