Morning Commentary: High-grade credit spreads unwind losses; Verizon stable; bank paper firms

By Cristal Cody

Tupelo, Miss., Oct. 22 – High-grade credit spreads were stable early Wednesday after tightening 3 basis points on Tuesday, with spreads reversing losses from the previous week, market insiders said.

The Markit CDX North American Investment Grade series 23 index ended 3 bps tighter at a spread of 66 bps on Tuesday.

In the secondary market, Verizon Communications Inc.’s long bonds traded flat to about 1 bp better ahead of the company’s four-tranche offering of senior notes later in the day, a source said.

Bank of America Corp.’s 4.25% subordinated notes due 2026 brought in the previous week were quoted 5 bps to 6 bps tighter in early trading, according to a market source.

Citigroup Inc.’s 3.75% notes due 2024 that priced in June firmed about 4 bps in the secondary market, a source said.

Verizon flat to better

Verizon’s 6.55% bonds due 2043 (Baa1/BBB+/A-) traded flat to 1 bp better at 168 bps offered, a source said.

Verizon sold $15 billion of the bonds at a spread of Treasuries plus 265 bps on Sept. 11, 2013.

The telecommunications company is based in New York City.

Bank of America firms

Bank of America’s 4.25% notes due 2026 (Baa3/BBB+/BBB+) tightened to 201 bps offered, according to a market source.

The paper traded early Tuesday at 207 bps offered.

Bank of America sold $2 billion of the notes on Friday at Treasuries plus 210 bps.

The financial services company is based in Charlotte, N.C.

Citigroup tightens

Citigroup’s 3.75% notes due 2024 tightened about 4 bps to 125 bps offered, according to a market source.

Citigroup sold $1.25 billion of the notes (Baa2/A-/A) on June 9 at a spread of Treasuries plus 115 bps.

The bank is based in New York City.

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