Disappointing economic data stalls new issuance; secondary trading 'muted' ahead of holiday

By Aleesia Forni and Andrea Heisinger

New York, July 2 - Potential issuers in the high-grade bond market chose to stand down on Monday as ISM manufacturing numbers for the United States and unemployment stats for the euro zone were announced.

The ISM report showed that manufacturing had declined in the United States.

"The market ended flat, but we were hit by the bad ISM number this morning," a source said after the close.

Those euro zone unemployment numbers were the highest on record, at 11.1% for May, according to Eurostat. This was the highest level since the euro zone was formed.

There was one deal for the day from an emerging markets issuer, but companies that are contending with vacations ahead of the mid-week Fourth of July holiday along with earnings blackouts are not expected to sell many bonds this week.

"It's going to be so quiet," one source said.

At the end of the previous week, syndicate desks had predicted that Monday was the only viable day for deals to get done as companies and desks are thinly staffed for the remainder of the week.

The unemployment numbers left the market tone down at the open and were coupled with a drop in manufacturing numbers and budget cuts in France.

Citigroup Inc. gave terms of its $750 million reopening of notes due in 2022, which were sold on Friday.

Volume for the remaining three days on which the bond market is open this week appears grim.

"I'm hearing of zero," a syndicate source said, referring to the number of deals on tap. "I'd be very surprised to see anything [Tuesday]."

The secondary market saw a "muted" session, as well, a bond source said late Monday.

"Tomorrow will surely be worse," the source added.

Citigroup reopening

Citigroup reopened its issue of 4.5% senior notes due in January 2022 to add $750 million, according to an FWP with the Securities and Exchange Commission.

The notes (Baa2/A-/A) were priced at a spread of Treasuries plus 250 bps.

Total issuance is $2 billion, including bonds priced in two previous deals.

The bookrunner was Citigroup Global Markets Inc.

The financial services company is based in New York City.

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