Midday Commentary: Investment-grade bonds flat at open; General Electric Capital firms

By Cristal Cody

Tupelo, Miss., Jan. 10 - Investment-grade bonds were little changed in early trading on Friday as the markets absorbed the December jobs report, according to informed sources.

The Labor Department reported the unemployment rate fell to 6.7% from 7%. However, December job growth came in at 74,000, much lower than the roughly 200,000 forecast.

The Markit CDX North American Investment Grade series 21 index closed unchanged on Thursday at a spread of 65 basis points.

"Investment grade spreads continued to tighten in the last two weeks of 2013 and the first week of the year," Barclays analysts said in a report on Friday. "While spreads are still much wider than pre-crisis tights, we believe the room for further tightening is limited given structural changes to the market, including a worse liquidity environment and wider financial spreads compared with before the crisis."

In the investment-grade secondary market, General Electric Capital Corp.'s new 2.3% notes due 2019 (A1/AA+/) traded about 2 bps tighter at 52 bps offered, a source said.

General Electric Capital sold $1 billion of the five-year notes with a spread of Treasuries plus 57 bps on Wednesday as part of a $3 billion three-part offering.

Norwalk, Conn.-based General Electric Capital is the funding arm of General Electric Co.

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