Investment-grade bond activity thins, primary likely shut for year; UnitedHealth mixed

By Cristal Cody

Tupelo, Miss., Dec. 21 – Activity remained light in the investment-grade bond market on Thursday with issuance mostly likely finished for the year.

The primary market has been quiet over the past four sessions.

In the secondary market, BBB spreads were trading stronger on Thursday and set a new post-financial crisis low of 128 basis points, an informed source said.

In addition, industry, energy, insurance and services sectors all set new post-crisis trading lows during the session, the source said.

In the secondary market, UnitedHealth Group Inc.’s senior notes (A3/A+/A) were mixed on Thursday but remain better than issuance, a source said.

UnitedHealth’s 3.375% notes due April 15, 2027 headed out unchanged at 66 bps bid.

The Minnetonka, Minn.-based diversified health company sold $625 million of the notes on March 8, 2017 at a spread of 87.5 bps over Treasuries.

UnitedHealth Group’s 4.25% notes due April 15, 2047 traded 2 bps softer at 96 bps bid.

The $725 million tranche priced in the March 8 offering at a Treasuries plus 110 bps spread.

The Markit CDX North American Investment Grade 29 index closed on Thursday about 1 bp tighter at a spread of 48 bps.

The S&P Global Ratings investment-grade composite spread softened 1 bp to 138 bps.

Funds extend gains

Meanwhile investment-grade corporate funds posted their 14th consecutive weekly gain following a rare two straight weekly losses, according to a Prospect News analysis of data from sources familiar with the fund flow statistics generated by AMG Data Services Inc.

The Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division indicated that the funds saw a net inflow of $1.14 billion during the reporting week ended Wednesday, on the heels of a $755 million upturn seen last week.

The inflows seen over the past 14 weeks have followed net outflows of $25 million recorded during week ended Sept. 13 and $43 million during the week ended Sept. 6, which had been the first loss of the year after 35 straight weekly net inflows this year before that and 37 weekly inflows overall dating back to the week ended Dec. 21, 2016 according to the Prospect News analysis.

This week’s inflow raised the year-to-date net inflow figure to an estimated $116.91 billion from last week’s estimated $115.77 billion, establishing a 13th consecutive new 2017 cumulative peak level, the analysis indicated.

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