Morning Commentary: High-grade bonds mixed in early trade; Merck mostly soft; spreads flat

By Cristal Cody

Tupelo, Miss., Feb. 10 – Investment-grade bonds opened Tuesday’s session mixed with the new issue from Merck & Co., Inc. mostly wider.

Merck’s bonds (A2/AA/), brought on Thursday in a six-tranche offering totaling $8 billion, traded flat to 3 basis points weaker.

The Markit CDX North American Investment Grade index ended unchanged at a spread of 66 bps on Monday.

Primary action is expected during Tuesday’s session.

BP Capital Markets plc plans a benchmark four-part deal during the day.

Citigroup Inc. intends to offer five-year notes.

Affiliated Managers Group Inc. is in the line-up to bring a $300 million offering of 10-year notes.

Ally Financial Inc. also plans to price a two-part offering of senior notes.

Merck mixed

In the secondary market, Merck’s 1.85% notes due 2020 eased 3 bps to 46 bps offered, a source said.

The company sold $1.25 billion of the five-year notes at Treasuries plus 55 bps.

The tranche of 2.75% notes due 2025 was quoted flat at 85 bps bid. Merck sold $2.5 billion of the notes at 95 bps over Treasuries.

Merck’s 3.7% notes due 2045 eased 1 bp to 121 bps offered. The company sold $2 billion of the long bonds at a spread of Treasuries plus 130 bps.

The health care company is based in Whitehouse Station, N.J.

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