Morning Commentary: CBS, GE Capital notes tighten; high-grade credit spreads modestly improve

By Cristal Cody

Tupelo, Miss., Jan. 8 – New investment-grade corporate bonds traded modestly tighter as market tone continues to improve slightly, sources said early Thursday.

CBS Corp.’s two tranches of senior notes (Baa2/BBB/BBB) priced on Wednesday were quoted slightly better in secondary trading.

General Electric Capital Corp.’s senior notes brought on Tuesday have tightened more than 10 basis points, a source said.

Credit spreads remained modestly improved over the morning following the release of minutes from the Federal Reserve policy meeting in the previous session, according to market sources.

The Markit CDX North American Investment Grade series 23 index firmed 2 bps to a spread of 70 bps on Wednesday.

“While the equity market staged a substantial rally yesterday and overnight futures are also pointed higher, the credit market response to the minutes has been more muted and credit spreads are only modestly tighter,” RBC Capital Markets, LLC analysts said in a note on Thursday. “There are lurking reminders of the challenges facing the credit market, despite a return to life in the new issue market.”

CBS firms

CBS’ 3.5% notes due 2025 traded about 2 bps better than issuance at 158 bps offered in the secondary market, a market source said.

CBS sold $600 million of the notes on Wednesday at Treasuries plus 160 bps.

The company’s tranche of 4.6% notes due 2045 were quoted tighter at 210 bps offered.

CBS sold $600 million of the bonds at Treasuries plus 215 bps.

The broadcasting company is based in New York.

GE Capital firms

General Electric Capital’s 2.2% notes due 2020 (A1/AA+/) were quoted stronger at 63 bps offered, according to a market source.

General Electric Capital sold $2 billion of the notes on Tuesday at Treasuries plus 75 bps.

The financial products and services subsidiary of General Electric Co. is based in Norwalk, Conn.

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