Investment-grade issuance expected to decline; sales from big banks possible; Fidelity weaker

By Aleesia Forni and Andrea Heisinger

New York, April 12 - Earnings announcements from large banks began before the market opened on Friday, and that coupled with some headlines kept issuers from selling bonds.

There was also data released showing that consumer spending in the United States dropped during the month of March.

"Not a lot of good news out there," a source said in the early afternoon.

JPMorgan Chase & Co. and Wells Fargo & Co. each released quarterly earnings before the market opened Friday.

JPMorgan reported revenue of $25.8 billion for the quarter, which was just below analyst expectations.

Earnings for the quarter grew at Wells Fargo to $5.2 billion from $4 billion in the same period of 2012. The numbers beat analyst projections for the San Francisco-based bank.

Neither name tapped the market after their announcements, although it's possible they could in the week ahead, a market source said just before the close Friday. Citigroup Inc. is set to announce earnings before the bell Monday.

There was between $10 billion and $15 billion of supply expected for the past week. About $10 billion was priced, according to Prospect News data, not including preferred stock, sovereign or emerging market issues.

Light issuance expected

Issuance is seen as light for the coming week, because "earnings blackout will be in full effect," one source said.

Syndicate desks reported expectations of between $5 billion and $10 billion pricing.

"We're not seeing a whole lot," one syndicate source from a large desk said. "Should be pretty quiet. Wouldn't be surprised to see some Yankees or sovereigns in there."

Another syndicate source at a smaller desk predicted $10 billion of high-grade bond sales.

"It should be pretty light, but I wouldn't be surprised to see some banks pop out," he added.

The Markit CDX Series North American Investment Grade index was "unchanged to a tad wider" early during the session before closing Friday unchanged at a spread of 82 basis points.

One trader noted that trading volume was $1.8 billion at midday.

Meanwhile, Fidelity National Information Services Inc.'s recent notes traded wider on the day.

Investment-grade bank and broker credit default swap costs were wider on the session, according to a market source

Bank of America Corp.'s CDS costs were 2 bps wider at 123 bps bid, 128 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 105 bps bid, 110 bps offered. JPMorgan's CDS costs were 1 bps wider at 86 bps bid, 90 bps offered. Wells Fargo's CDS costs widened 2 bps to 69 bps bid, 73 bps offered.

Merrill Lynch's CDS costs were 1 bp wider at 104 bps bid, 114 bps offered. Morgan Stanley's CDS costs rose 3 bps to 138 bps bid, 143 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 2 bps to 125 bps bid, 130 bps offered.

Fidelity National weakens

Fidelity National Information Services' $250 million tranche of 2% five-year notes was quoted 4 bps wider compared to levels seen Thursday at 128 bps bid, 124 bps offered.

A trader had quoted the notes at 125 bps offered at midday on Friday.

The notes priced at a spread of Treasuries plus 135 bps.

The sale also included a $1 billion tranche of 3.5% 10-year notes, which sold at 180 bps over Treasuries on Wednesday.

Fidelity National Information Services is a Jacksonville, Fla.-based banking and payment technologies company.

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