Primary takes breather; Goldman, Morgan Stanley paper tightens; AT&T firms; Verizon eases

By Cristal Cody

Tupelo, Miss., Aug. 14 – Investment-grade primary action came to a stop on Thursday following about $16 billion of issuance brought over the first part of the week.

“There was a lot of supply this week, and it’s summer,” one syndicate source said. “Things are quieting down as we move into the Labor Day holiday season with [issuance] to pick back up in September.”

The primary market is expected to remain quiet on Friday.

“True summer week,” a market source said.

The Canadian bond markets buzzed earlier in the day on speculation of a potential bank deal, a source said. The week has seen one Canadian high-grade issuer tap the market.

“There was speculation this morning because the belly of the bank deposit note curve was widening from selling pressure,” the source said. “The speculation was a bank deal was coming, but nothing happened. It’s been very, very quiet.”

Investment-grade bonds were mostly better over the session, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 1 basis point to a spread of 59 bps.

In the secondary market, Goldman Sachs Group Inc.’s 3.85% notes due 2024 tightened 6 bps, a source said.

Bank of America Corp.’s 4% notes due 2024 traded 5 bps better over the session, a market source said.

Morgan Stanley & Co. Inc.’s 3.875% notes due 2024 headed out 3 bps softer.

Bonds in the telecom sector were mixed, according to a market source.

AT&T Inc.’s 3.9% note due 2024 tightened 5 bps, while Verizon Communications Inc.’s senior notes were flat to softer in trading.

Goldman Sachs tightens

Goldman Sachs’ 3.85% notes due 2024 (Baa1/A-/A) tightened 6 bps to 134 bps offered on Thursday, a source said.

Goldman Sachs sold $2.25 billion of the notes on June 30 at Treasuries plus 135 bps.

The financial services company is based in New York City.

Bank of American firms

Bank of America’s 4% notes due 2024 (Baa2/A-/A) traded 5 bps better at 130 bps offered, a market source said.

The Charlotte, N.C.-based financial services company sold $2.75 billion of the notes on March 27 at a spread of Treasuries plus 137 bps.

Morgan Stanley eases

Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) widened 3 bps to 129 bps offered in trading over the day, a source said.

Morgan Stanley priced $3 billion of the notes at Treasuries plus 130 bps on April 23.

The financial services company is based in New York City.

AT&T tightens

AT&T’s 3.9% notes due 2024 (A3/A-/A) firmed 5 bps to 98 bps offered in secondary trading, according to a market source.

AT&T sold $1 billion of the 10-year notes on March 5 at Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Verizon softens

Verizon’s 2.55% notes due 2019 (Baa1/BBB+/A-) eased to 62 bps offered, according to a market source.

The notes traded in Wednesday’s session at 57 bps offered.

Verizon sold $500 million of the notes at 95 bps over Treasuries on March 10.

The telecommunications company is based in New York City.

Bank/broker CDSs flat to lower

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

Bank of America’s CDS costs firmed 1 bp to 69 bps bid, 72 bps offered. Citigroup Inc.’s CDS costs ended flat at 69 bps bid, 72 bps offered. JPMorgan Chase & Co.’s CDS costs were unchanged at 56 bps bid, 59 bps offered. Wells Fargo & Co.’s CDS costs ended flat at 45 bps bid, 48 bps offered.

Merrill Lynch’s CDS costs tightened 1 bp to 72 bps bid, 76 bps offered. Morgan Stanley’s CDS costs firmed 1 bp to 76 bps bid, 79 bps offered. Goldman Sachs Group’s CDS costs declined 1 bp to 79 bps bid, 84 bps offered.

Paul Deckelman contributed to this review.

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