Quiet Friday wraps up $18 billion week for high-grade primary; trading thins; Verizon widens

By Aleesia Forni and Cristal Cody

Virginia Beach, April 11 - The high-grade bond market capped off a solid week with no new issues selling during Friday's session.

"Typical Friday today," one source said during the session. "Not much happening."

Yankee issuers made up a large part of high-grade primary supply during the week, with earnings blackouts keeping a lid on most new issuance from the corporate sector.

According to Lipper, investment-grade funds saw inflows of $1.1 billion for the week ended April 9, bringing the year-to-date total inflows to more than $31 billion.

Despite the beginning of earnings season, more than $18 billion of paper sold this week in the investment-grade primary, beating predictions from earlier this week of $15 billion of supply.

Investment-grade bonds headed out wider in light trading over the afternoon, sources said.

The Markit CDX North American Investment Grade series 22 index eased 2 basis points to a spread of 70 bps on Friday.

Investment-grade bond volume was about $7 billion at the market close, according to a market source.

"I didn't see too much enthusiasm for anything, and stocks were off," a trader said. "It was a very dead day."

JPMorgan Chase & Co.'s paper eased about 5 bps earlier in the day on the company's weak first-quarter earnings report but saw few trades in the afternoon, a trader said.

Verizon Communications Inc.'s bonds eased as much as 5 bps in thin trading, according to a trader.

JPMorgan paper

JPMorgan's 3.875% notes due 2024 (A3/A/A+) traded earlier on Friday at 105 bps bid, 101 bps offered, but nothing was seen later in the day, a trader said.

"Just odd lots," the trader said. "The biggest trade was 25 bonds, nothing really to speak of."

The notes priced in a $1.5 billion offering on Jan. 21 at a spread of Treasuries plus 112.5 bps.

The financial services company is based in New York City.

Verizon widens

Verizon's 5.15% notes due 2023 headed out on Friday in the 120 bps bid, 122 bps offered area, a trader said.

"Yesterday they were trading around 118 [bps] and as tight as 115 [bps], so they are a little wider," the trader said.

Verizon sold $11 billion of the notes (Baa1/BBB+/A-) at Treasuries plus 225 bps as part of the $49 billion eight-tranche debt offering brought on Sept. 11.

The telecommunications company is based in New York City.

Bank/brokerage CDS rise

Investment-grade bank and brokerage CDS prices rose, according to a market source.

Bank of America Corp.'s CDS costs widened 4 bps to 68 bps bid, 71 bps offered. Citigroup Inc.'s CDS costs rose 4 bps to 77 bps bid, 80 bps offered. JPMorgan Chase's CDS costs eased 5 bps to 61 bps bid, 64 bps offered. Wells Fargo & Co.'s CDS costs rose 3 bps to 39 bps bid, 42 bps offered.

Merrill Lynch's CDS costs eased 3 bps to 72 bps bid, 73 bps offered. Morgan Stanley's CDS costs rose 3 bps to 82 bps bid, 85 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 5 bps to 93 bps bid, 96 bps offered.

Paul Deckelman contributed to this review.

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