Midday Commentary: Investment-grade market gears up for active session; Verizon firms

By Cristal Cody

Tupelo, Miss., Jan. 6 - The investment-grade market geared up for a busy Monday and the first full week of trading in 2014 with spreads initially tighter in morning trade, according to market sources.

Several issuers are expected to come to market later Monday, including Berkshire Hathaway Inc. and FedEx Corp.

"Credit spreads are moving tighter this morning as market participants return from the holidays and reassume a buying position following the two-week lull," RBC Capital Markets, LLC analysts said in a note on Monday. "To give some context to the corporate bond market, we opened last year at 85 [basis points] (IG) and 442 bps (HY) and hit 98 bps and 478 bps, respectively, during the taper-tantrum in the summer months."

The Markit CDX North American Investment Grade series 21 index opened the day with a spread of 63 bps.

In the secondary market, paper from Verizon Communications Inc., which brought a record $49 billion eight-tranche bond offering in 2013, continues to remain actively traded, sources said.

Verizon stronger

Verizon's 6.55% bonds due 2043 (Baa1/BBB+/A-) traded about 1 bp tighter at 141 bps bid early Monday, a source said. The bonds have tightened nearly 10 bps since Dec. 23, according to market sources.

Verizon sold $15 billion of the 30-year bonds at Treasuries plus 265 bps on Sept. 11.

The telecommunications company is based in New York City.

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