Morning Commentary: High-grade bonds mixed; Aetna mostly unchanged; credit spreads tighten

By Cristal Cody

Eureka Springs, Ark., June 6 – Investment-grade bonds were mixed in early secondary trading on Monday with supply on tap later in the session, including a 50-year floating-rate note from United Parcel Service, Inc.

Traders were expected to be focused on Federal Reserve chairman Janet Yellen’s midday speech before the World Affairs Council of Philadelphia for clues to the timing of the next interest rate hike.

Aetna Inc.’s senior notes (Baa2/A/A-) that priced in eight tranches on Thursday to help fund its merger with Humana Inc. traded mostly unchanged from Friday in the secondary market.

The three-month Libor yield was stable at 68 basis points on Monday.

The Markit CDX North American Investment Grade index opened the session 2 bps tighter at a spread of 76 bps.

Aetna steady

Aetna’s 2.4% notes due 2021 were quoted at 98 bps offered in the secondary market early Monday, according to a market source.

The company sold $1.85 billion of the five-year notes on Thursday at Treasuries plus 105 bps.

Aetna’s 3.2% notes due 2026 were unchanged from Friday at 144 bps offered. The notes were sold in Thursday’s offering in a $2.8 billion tranche at Treasuries plus 145 bps.

The diversified health care benefits company is based in Hartford, Conn.

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