JPMorgan, Citigroup notes firm; steady post-holiday volume on tap; corporate flows rise

By Cristal Cody

Tupelo, Miss., May 26 – New high-grade bank paper priced this week traded mostly better in the secondary market as the space starts to see some calm after a rocky two months, sources reported.

JPMorgan Chase & Co.’s new 5.35% fixed-to-floating rate notes due 2034 (A1/AA-) were tighter at 160 basis points bid, 157 bps offered.

The notes priced in a $2.5 billion offering on Wednesday at par to yield a spread of 162.5 bps over Treasuries.

Talk was at the 190 bps over Treasuries area.

Citigroup Inc.’s new 6.174% subordinated notes due 2034 (Baa2/BBB/BBB+) firmed to 234 bps bid, 227 bps offered.

The notes priced Monday in a $3.2 billion tranche at par to yield 245 bps over Treasuries, better than initial talk in the 280 bps over Treasuries area.

High-grade issuers sold $14.45 billion of notes over the week, with Citigroup and JPMorgan bringing the largest tranches, sources reported.

Volume came on the low side of about $15 billion to $20 billion of issuance expected following the more than $62 billion of investment-grade bonds priced the week prior.

Looking ahead to post-holiday action, about $15 billion to $20 billion of new bonds are expected to print when the high-grade bond market reopens on Tuesday following the Memorial Day holiday, sources said.

June is a little harder to predict with the debt ceiling negotiations ongoing, but market sources said the month should see about $100 billion of deal volume.

Inflows improve

Inflows into corporate investment-grade funds climbed to $3.02 billion over the past week ended Wednesday, up from $2.16 billion of inflows in the previous week and $1.43 billion in the week prior, according to Refinitiv Lipper US Fund Flows.

Year to date, inflows total $19.33 billion.

Meanwhile, inflows to U.S. high-grade funds and ETFs rose to $3.9 billion this past week ended Wednesday from $3.64 billion in the prior week and $2.1 billion a week earlier, according to a BofA Securities Inc. research note.

ETF inflows softened to $2.99 billion over the week from $3.96 billion in the prior week, while high-grade fund flows turned positive with $910 million of inflows following a $500 million outflow in the previous week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.