Markets lurch on pandemic, oil prices; bond, credit spreads widen; Florida Power plans deal

By Cristal Cody

Tupelo, Miss., March 9 – Investment-grade issuers stood down on Monday as the financial markets tumbled, bond spreads widened and credit spreads moved out more than 30 basis points on the day.

Florida Power & Light Co. offered 50-year registered floating-rate notes.

Otherwise, supply was quiet as stocks tanked and Treasury yields dropped to unprecedented levels on continuing and expanding coronavirus infections, slashed oil prices and growing concerns of a recession.

The Markit CDX North American Investment Grade 33 index widened to 113.67 bps from where it closed Friday at a spread of 82.75 bps.

In the same day a week ago, the index finished at a spread of 65.06 bps.

Stock indexes were down more than 7% on the day with trading halted for 15 minutes at the start of the session. The Dow Jones industrial average declined more than 1,300 points, or 5.2%, over the morning and ended the day down 2,013.76 points, or 7.79%.

Treasury yields fell 8 bps to 28 bps across the curve.

The benchmark 10-year Treasury note yield dropped 21 bps to a new all-time low of 0.499%.

Deal supply for this week is hard to forecast with the extreme volatility in the financial markets, sources report.

Bond volume totaled more than $27 billion last week, better than the up to $15 billion range expected, after the Federal Reserve trimmed interest rates on Tuesday.

The Bank of Canada also cut rates last week and further central bank cuts are being eyed at the next meetings in March and April, according to market analysts.

The Federal Reserve’s next monetary policy meeting is March 17-18.

High-grade secondary trading volume was thin during the session, a source said.

Bank and financial paper widened about 15 bps to 75 bps on the day, another source said.

Energy Transfer weakens

In the energy space, Energy Transfer Operating LP’s 3.75% notes due May 15, 2030 (Baa3/BBB-/BBB-) ended the day with an 81 handle from where the notes last traded on Friday at 99.71, a source said.

The notes were quoted as a low as 80.86 early in the session.

Another source quoted the notes down 8 points at the 92 area.

The issue moved out more than 120 bps on the day to the 414 bps interpolated area, a source said.

The Dallas-based natural gas midstream and intrastate transportation and storage company sold $1.5 billion of the bonds on Jan. 7 at 99.843 to yield 3.769% and a Treasuries plus 255 bps spread.

Western Midstream Operating, LP’s 4.05% notes due Feb. 1, 2030 (Ba1/BBB-/BBB-) were not seen in trading during the session but remain soft from where the issue was last seen on Friday at the 100.25 area and 382 bps area, sources said.

The company sold $1.2 billion of the bonds on Jan. 9 at 99.90 to yield 4.062% and a spread of 220 bps over Treasuries.

The Woodlands, Texas-based company owns, develops and operates midstream energy assets.

Cigna notes soften

Cigna Corp.’s new 3.4% senior notes due March 15, 2050 (Baa2/A-/BBB) traded weaker but better than issuance at 103.33 during the session from 104.98 on Friday, a market source said.

The Bloomfield, Conn.-based health service company sold $1.25 billion of the 30-year notes on Wednesday at 99.813 to yield 3.41% and with a Treasuries plus 177 bps spread.

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