High-grade primary action quiets on holiday eve; supply pickup forecast; credit spreads firm

By Cristal Cody

Tupelo, Miss., Nov. 25 – The investment-grade bond market stayed quiet on the eve of Thanksgiving Day with no reported corporate or sovereign, supranational and agency issuers.

Wednesday was the last full session of the week with the bond markets set to close on Thursday and close early at 2 p.m. ET on Friday.

Deal volume has been thin week to date with just one reported corporate deal priced on Monday and three SSA issuers in the primary market on Tuesday.

Only up to about $5 billion of supply was expected this week by market participants.

The week ahead is predicted to kick off with heavier volume of about $15 billion to $20 billion forecast with deal windows seen mostly over the first two weeks of December, according to syndicate sources.

About $25 billion to $35 billion or more of investment-grade corporate bonds are anticipated to price over the final month of the year.

Market tone was mixed but mostly positive in the high-grade space on Wednesday.

Credit spreads firmed about 0.53 basis point and headed into the holiday more than 4 bps tighter week to date.

The Markit CDX North American Investment Grade 35 index closed the session at a spread of 52.3 bps.

The PIMCO Investment Grade Corporate Bond index ended the day flat at $116.57.

The iShares iBoxx Investment Grade Corporate Bond ETF gained 0.06% to $137.51.

Meanwhile, secondary supply has been heavier this week with $23.62 billion of high-grade corporate bonds traded on Tuesday, up from $21.06 billion on Monday, according to Trace.

Verizon Communications Inc.’s $12 billion of senior notes (Baa1/BBB+/A-) priced in five tranches earlier in November have been among the most active issues in the secondary market this week, a source said.

The company’s 2.875% notes due Nov. 20, 2050 were heavily traded on Wednesday and were last seen at 103.27.

Verizon sold $2.75 billion of the 30-year notes on Nov. 10 at 99.74 to yield 2.89%.

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