Bank of America prices; week’s supply shy of predictions; Citigroup paper soft; spreads firm

By Aleesia Forni and Cristal Cody

Virginia Beach, March 20 – Bank of America NA sold a new bond offering on Friday to close the week for the investment-grade bond market.

The bank priced $1.75 billion of three-year senior bank notes during the session with a spread of Treasuries plus 75 basis points.

Pricing was at the tight end of guidance and around 12.5 bps tight of the mid-point of initial price talk.

Friday’s lone deal pushes the week’s total new issuance to $19,425,000,000, still short of what was predicted to be around a $25 billion to $30 billion week.

Meanwhile, Lipper reported inflows of $1.732 billion into corporate high-grade bond funds for the week ended March 18, which saw inflows of $571 million.

The total was up from last week’s inflows of $571 million, bringing the year-to-date total inflows to $23.425 billion.

With the Federal Open Market Committee meeting out of the way, sources are expecting activity to pick up in the week ahead to close out the month of March.

Around $25 billion of new issuance is expected to price.

Bank of America’s 1.65% notes due 2018 were not seen in aftermarket activity.

“Nothing,” a trader said.

Citigroup Inc.’s 3.875% subordinated notes due 2025 eased 1 bp on the bid side in secondary trading.

The Markit CDX North American Investment Grade series 23 index closed the day 1 bp tighter at a spread of 63 bps.

BofA bank notes

Bank of America sold $1.75 billion of 1.65% three-year senior bank notes (A2/A/A) on Friday with a spread of Treasuries plus 75 bps, according to an informed source.

Pricing was at 99.863 to yield 1.697%.

The notes were guided in the 80 bps area over Treasuries. Initial talk was set in the 87.5 bps area over Treasuries.

BofA Merrill Lynch was the bookrunner.

Proceeds will be used for general corporate purposes.

No aftermarket trading was seen in Bank of America’s 1.65% notes due 2018 as the session closed, a trader said.

Bank of America is a financial services company based in Charlotte, N.C.

Citigroup eases

Citigroup’s 3.875% subordinated notes due 2025 (Baa3/BBB+/A-) traded late Friday afternoon at 194 bps bid, 192 bps offered, a trader said.

Citigroup priced $1 billion of the notes on Thursday at a spread of Treasuries plus 193 bps.

The financial services provider is based in New York.

Bank/broker CDS costs lower

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

Bank of America Corp.’s CDS costs were down 1 bp to 66 bps bid, 68 bps offered. Citigroup’s CDS costs declined 1 bp to 74 bps bid, 78 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 64 bps bid, 68 bps offered. Wells Fargo & Co.’s CDS costs were 1 bp lower at 41 bps bid, 45 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 70 bps bid, 74 bps offered. Morgan Stanley’s CDS costs fell 1 bp to 74 bps bid, 78 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp lower at 84 bps bid, 88 bps offered.

Paul Deckelman contributed to this review.

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