Primary market sees no new issues, quiet week expected; Kroger steady; Time Warner Cable firms

By Cristal Cody and Aleesia Forni

Virginia Beach, Dec. 17 - The primary market was empty of new issues on Tuesday, as the Federal Open Market Committee kicked off the first day of its two-day meeting.

Sources had predicted $5 billion of high-grade supply for the week.

Around $4 billion of deals were priced on Monday, led by the $2 billion four-part sale from Kroger Co.

The primary is likely to remain muted on Wednesday, with all eyes on the policy announcement from the Federal Reserve.

"This was probably the last day [for new issues], so the rest of the week should be quiet," a market source said.

Secondary market action stayed fairly quiet on Tuesday with some issues firmer ahead of the FOMC policy announcement on Wednesday, sources said.

"Haven't seen too much flow," one source said. "The CDX is barely wider. Volume is pretty good at $16 billion."

The Markit CDX North American Investment Grade series 21 index headed out 1 basis point wider to a spread of 70 bps.

"We're still seeing secondary trading activity, and buyers are still transacting, so that leaves the door open," another market source said.

Kroger Co.'s 2.3% notes due 2019 firmed 2 bps in trading on Tuesday, according to a trader. The grocery retailer's tranche of 3.3% notes due 2021 traded mostly unchanged from Monday.

Time Warner Cable Inc.'s bonds traded better over the session, a trader said. Time Warner Cable's bonds have rallied since late the previous week with both Comcast Corp. and Charter Communications Inc. reportedly considering a takeover bid, market sources said.

Kroger steady

Kroger's $2 billion of senior notes (Baa2/ BBB/BBB) sold in four tranches on Monday traded flat to slight better in the secondary market on Tuesday, a trader said.

The tranche of 2.3% notes due 2019 tightened to 73 bps bid, 75 bps offered, a trader said.

The issue headed out in the aftermarket on Monday at 75 bps bid, 70 bps offered after Kroger sold $500 million of the notes at 80 bps over Treasuries.

Kroger's tranche of 3.3% notes due 2021 were offered in the 104 bps to 105 bps area on Tuesday, the trader said.

The notes traded late Monday at 107 bps bid, 104 bps offered. Kroger sold $700 million of the seven-year notes at Treasuries plus 110 bps.

The grocery retailer is based in Cincinnati.

Time Warner Cable firms

Time Warner Cable's 4% notes due 2021 (Baa2/BBB/BBB) traded early afternoon on Tuesday at 235 bps bid, 225 bps offered, according to a trader.

The notes were quoted early Monday at 245 bps bid, 235 bps offered, better than where the issue traded a week ago at 270 bps bid, 260 bps offered.

Time Warner Cable sold $1 billion of the notes at a spread of 210 bps over Treasuries in 2011.

The company's 5% senior notes due 2020 traded at 195 bps bid, 185 bps offered, a trader said. The notes were seen just before the Thanksgiving holiday at 181 bps bid, 160 bps offered. Time Warner Cable sold $1.5 billion of the notes at Treasuries plus 188 bps in 2009.

The company's 6.75% debentures due 2039, among the week's most active high-grade bonds, traded at 340 bps bid, 330 bps offered on Tuesday. Time Warner Cable sold $1.5 billion of the debentures in 2009 at Treasuries plus 260 bps.

The broadband communications company is based in New York City.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were unchanged on the day, according to a market source.

Bank of America Corp.'s CDS costs were flat at 80 bps bid, 84 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 74 bps bid, 78 bps offered. JPMorgan Chase & Co.'s CDS costs closed flat at 69 bps bid, 73 bps offered. Wells Fargo & Co.'s CDS costs ended flat at 42 bps bid, 46 bps offered.

Merrill Lynch's CDS costs closed unchanged at 82 bps bid, 89 bps offered. Morgan Stanley's CDS costs were flat at 93 bps bid, 98 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended unchanged at 96 bps bid, 101 bps offered.

Paul Deckelman contributed to this review.

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