Primary market empty, 'busy November' ahead; Santander off tights, Citi flat in secondary

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 1 - The high-grade primary bond market saw a fairly quiet session on Friday with no new deals priced during the day.

Roughly $22 million of new high-grade deals were sold during the slightly-busier-than-expected week.

The week's new deals brought October's supply total to more than $90 billion, according to Prospect News data.

The pace of issuance is likely to continue for the foreseeable future, one source said Friday, adding that he expects roughly $20 billion of new high-grade deals for the week ahead.

The source added he is "expecting a busy November," with supply forecasted around $80 billion to $100 billion.

Market action slowed early Friday with investment-grade bonds flat to wider in secondary trading, sources said.

The high-grade market was "OK, but not great," a source said on Friday. "It's pretty quiet."

Financial paper traded about 2 basis points to 5 bps wider on the day.

Santander UK plc's Santander's 5% subordinated notes due 2023 eased off their tights from earlier in the day in secondary trading going out the door on Friday, according to a market source.

Citigroup Inc.'s paper remained mostly unchanged in the secondary market over the session, a source said.

Coca-Cola Co.'s 3.2% senior notes due 2023 (Aa3/AA-/A+) brought in a five-tranche offering on Tuesday were weaker in trading on Friday, a source said.

Santander off tights

Santander's 5% subordinated notes due 2023 traded late in the afternoon at 239 bps bid, 234 bps offered, a source said.

"They were better," the source said. "They had gotten as tight as 235 bid, but now they've backed off a little bit."

In the morning session, the issue was quoted at 234 bps bid, 231 bps offered.

Santander (A2/A/A) sold $1.5 billion of the notes with a spread of Treasuries plus 250 bps on Thursday.

The financial services company is based in London.

Citi wrapped around issuance

Citigroup's new 4.95% senior notes due Nov. 7, 2043 (Baa2/A-/A) traded late in the day slightly wider on the bid side at 132 bps bid, 128 bps offered, a source said.

The notes were quoted early Friday at 131 bps bid, 130 bps offered.

Citigroup priced the $500 million 30-year offering on Thursday with a spread of Treasuries plus 130 bps.

The financial services company is based in New York.

Coca-Cola widens

Coca-Cola's 3.2% notes due 2023 eased in secondary trading to 73 bps bid, 69 bps offered, a market source said on Friday.

The company priced $1.5 billion of the 10-year notes at Treasuries plus 70 bps on Tuesday.

The beverage company is based in Atlanta.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were little changed on Friday, according to a market source.

Bank of America Corp.'s CDS costs were unchanged at 96 bps bid, 101 bps offered. Citigroup Inc.'s CDS costs eased 1 bp to 89 bps bid, 93 bps offered. JPMorgan Chase & Co.'s CDS costs were flat at 84 bps bid, 87 bps offered. Wells Fargo & Co.'s CDS costs ended unchanged at 53 bps bid, 57 bps offered.

Merrill Lynch's CDS costs went out flat at 96 bps bid, 101 bps offered. Morgan Stanley's CDS costs were unchanged at 110 bps bid, 114 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended flat at 115 bps bid, 118 bps offered.

Paul Deckelman contributed to this review

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