Midday Commentary: High-grade bonds flat to wider ahead of supply; FedEx bonds unchanged

By Cristal Cody

Tupelo, Miss., Jan. 7 - Investment-grade corporate bonds traded flat to "barely wider" at the open on Tuesday in front of more than $5 billion of supply expected to price later in the day, according to a market source.

The Markit CDX North American Investment Grade series 21 index closed on Monday unchanged at a spread of 63 basis points.

Issuers including FedEx Corp. priced more than $6 billion of high-grade bonds on Monday.

In the secondary market, FedEx's senior notes (Baa1/ BBB/) started the session flat on the bid side and tighter on the offered side from where the issue traded late Monday, according to a trader.

FedEx's 4% notes due 2024 traded early Tuesday at 102 bps bid, 96 bps offered, the trader said.

The issue headed out on Monday at 102 bps bid, 101 bps offered after FedEx sold $750 million of the notes with a spread of Treasuries plus 105 bps.

The Memphis-based shipping and logistics management company priced a $2 billion three-part offering of senior notes on Monday.

Verizon notes ease

In other trading, Verizon Communications Inc.'s 5.15% notes due 2023 (Baa1/BBB+/A-) have eased about 3 bps since Friday, according to market sources.

The issue traded early Tuesday at 121 bps bid, compared to Friday's quote of 118 bps bid, 115 bps offered.

Verizon sold $11 billion of the 10-year notes at Treasuries plus 225 bps on Sept. 11 as part of a record $49 billion eight-tranche debt offering.

The telecommunications company is based in New York City.

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