Investment-grade primary slows, accounts look to coming week for paper; Goldman Sachs wider

By Andrea Heisinger and Cristal Cody

New York, May 14 - New bonds took a break from the high-grade primary market on Friday following a busy few days of issuance.

More than $10 billion in new high-grade debt was priced during the past week, easily beating the previous week's total of less than $1 billion.

It's unclear what the coming week will look like, although one syndicate source said late in the day that he was optimistic that issuers would stay active.

"We had a good variety [last week]," he said. "We should have a fair amount [of new deals] coming up."

Another market source said they would have to "wait and see" for how the tone holds up over the weekend.

Goldman Sachs Group Inc.'s paper widened more than 30 bps after coming in about 10 bps the previous day, but it was in a light trading session, sources said.

Overall Trace volume in the investment-grade market dropped 34% to less than $8.5 billion, according to a source.

The CDX Series 14 North American high-grade index moved out 8 bps to a mid bid-asked spread level of 108 bps, a source reported.

In Treasuries, short-term government debt tightened on concerns about the stability of the euro and the ramifications of a nearly $1 trillion loan package to rescue debt-laden countries in the eurozone.

Yields on the 10-year benchmark note firmed to 3.45% from 3.53% the day before. Yields on the five-year note were 9 bps lower at 2.15%. The yields on the 30-year bonds firmed to 4.34% from 4.43%.

Desks happy with past week

The seeming wealth of new investment-grade bonds hitting the market in the past week gave the primary a boost that it hasn't had in a couple of weeks, a source said at the end of the day.

"The week was a good one," the source said. "A lot of people are out there looking for good paper, so it was nice to have some coming in."

There has not been a lack of accounts at the ready with cash for investment-grade bonds. That should be true for the coming week too.

"It's not like we had an overwhelming number [of new deals]," a market source said. "We still have people looking for paper anyway."

No upcoming deals have been announced, although the coming week should see more from the industrial and utility sectors that have recently come back to life after earnings blackouts.

Barclays gives floater deal terms

While there were no new deals Friday, Barclays Bank plc disclosed terms on a small deal priced Thursday. The bank said it sold $81 million of one-year global medium-term floating-rate notes (Aa3/AA-) at par to yield three-month Libor plus 40 bps, according to a 424B2 filing with the Securities and Exchange Commission.

The agent was Barclays Capital Inc.

The financial services company is based in London.

Goldman wider

Goldman Sachs' 5.375% notes due 2020 moved out 36 bps in trading on Friday, a source said.

The notes were quoted early afternoon at 236 bps, compared to 200 bps in trading early Thursday.

The 10-years have widened since trading in April at 167 bps on the offer side, according to sources.

In addition, Goldman's 5.625% notes due 2017 were about 4 bps wider at 256 bps over Treasuries in Friday's market.

The Securities and Exchange Commission has filed civil fraud charges against New York-based Goldman, which also is under a criminal investigation by the Justice Department over subprime mortgage securities investments.

Also in the financial sector, Charlotte, N.C.-based Bank of America Corp.'s 7.625% notes due 2020 were seen 10 bps wider at 232 bps on Friday, according to a source.

U.S. credit default swaps rally

The rally in Treasuries over the week from debt concerns in Europe spilled over to higher rated credits, according to Standard & Poor's.

"CDS spreads for S&P 100 CDS and S&P CDS U.S. Investment Grade indices fell by over 16% this week, but are still north of month-end levels and much higher than at year end," J.R. Rieger, vice president of fixed income indices at Standard & Poor's, said in a research note on Friday.

"The indices, generally much less volatile than its high yield sibling, are up less than 1% this week."

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