Morning Commentary: Disney eases; Citigroup paper widens; credit spreads soften at open

By Cristal Cody

Tupelo, Miss., Jan. 7 – Bonds in the investment-grade corporate market traded mostly softer early Thursday as Chinese equities plunged and credit spreads opened the session weaker.

Walt Disney Co.’s 3% senior notes due 2026 eased about 1 basis point from where the bonds traded late Wednesday afternoon.

Citigroup Inc.’s 3.7% senior notes due 2026 traded 3 bps weaker early Thursday.

The Markit CDX North American Investment Grade 25 index opened 2 bps wider at a spread of 95 bps.

The three-month Libor yield was up 1 bp at 62 bps at the start of the day.

Secondary trading was slightly lower on Wednesday with about $16.6 billion of high-grade issues traded, down from $17.05 billion of bonds traded on Tuesday, according to Trace.

Disney eases

Walt Disney’s 3% notes due 2026 traded about 1 bp weaker over the morning at 80 bps bid, a market source said.

The notes headed out on Wednesday at 79 bps bid, 78 bps offered.

Disney sold $1 billion of notes (A2/A/A) on Tuesday at 80 bps over Treasuries.

The entertainment and media company is based in Burbank, Calif.

Citigroup weakens

Citigroup’s 3.7% notes due 2026 were quoted 3 bps weaker at 152 bps offered in early secondary trading, according to a market source.

Citigroup sold $2 billion of the notes (Baa1/BBB+/A) on Tuesday at a spread of Treasuries plus 148 bps.

The financial services company is based in New York.

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