Primary pauses to close $64 billion week; Energy Transfer bonds firm in secondary

By Aleesia Forni

Virginia Beach, March 6 – The primary market took a pause on Friday to focus on the release of the nonfarm payrolls data, closing a frenzied week for investment-grade bonds.

The U.S. Labor Department reported that the economy gained 295,000 jobs in February, topping forecasts of 235,000, and the unemployment rate fell to 5.5%.

The report comes at the heels of the busiest week of the year for the high-grade bond market, which hosted roughly $64 billion of supply to kick off the month of March.

Meanwhile, Lipper reported inflows of $1.638 billion into corporate high-grade bond funds for the week ended March 4.

The total was up from last week’s inflows of $1.318 billion, bringing the year-to-date total inflows to $21.122 billion.

Looking forward, sources are calling for around $25 billion to $30 billion of new issuance to price during the week ahead.

In the secondary market, investment-grade bond spreads were mostly flat to tighter on the day.

The Markit CDX North American Investment Grade index headed out unchanged at a spread of 60 basis points on Friday.

Recently priced bonds from Energy Transfer Partners LP traded tighter at mid-morning and continued to firm later during the session, according to market sources.

The company’s $1 billion tranche of 4.05% notes due 2025, which sold with a spread of 195 bps over Treasuries, was quoted at 191 bps bid, 190 bps offered.

The $1 billion of 5.15% notes due 2045, which sold at Treasuries plus 245 bps, traded around 2 bps better on the day at 239 bps bid offered.

The $2.5 billion issue sold in three tranches on Thursday.

The energy gathering and transportation company is based in Dallas.

Bank/broker CDSs unchanged

Investment-grade bank and brokerage CDS prices were flat on Friday, according to a market source.

Bank of America Corp.’s CDS costs were flat at 63 bps bid, 66 bps offered. Citigroup, Inc.’s CDS costs were flat at 71 bps bid, 74 bps offered. JPMorgan Chase & Co.’s CDS costs were unchanged at 61 bps bid, 64 bps offered. Wells Fargo & Co.’s CDS costs remained at 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs were flat at 66 bps bid, 69 bps offered. Morgan Stanley’s CDS costs were unchanged at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.’s CDS costs were also flat at 79 bps bid, 82 bps offered.

Paul Deckelman contributed to this review.

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