Slow week for primary wraps with no new deals; Bank of America paper firms; Citigroup better

By Cristal Cody and Aleesia Forni

Virginia Beach, March 28 - The investment-grade primary market closed the week on Friday with no new issues pricing.

Roughly $16.1 billion of paper sold in the primary this week, continuing the slowdown the market has seen since last week's Federal Open Market Committee meeting and Wednesday's Federal Reserve statement.

Even though the week's new deals were met with solid demand, sources are expecting the primary lull to continue.

"We're not expecting much next week," a market source said.

Around $15 billion of supply is expected to price during the week that will close out the month of March.

Meanwhile, Seaspan Corp.'s $300 million of 6.375% $25-par notes due 2019 freed to trade after pricing late Thursday.

A trader saw the issue at $25.25 early in the session. At the close, another market source said the notes ended at $25.20 bid.

"So good job by these underwriters," he commented.

Trading stayed mostly light on Friday with financial paper stronger on the day, according to market sources.

"Very quiet day," a trader said. "I.G. volume [is] at $2.8 billion."

The Markit CDX North American Investment Grade series 22 index ended Friday 1 basis point tighter at a spread of 70 bps.

Bank of America Corp.'s senior notes (Baa2/A-/A) brought in the previous session traded 8 bps to 9 bps better than issuance, according to a trader.

Citigroup Inc.'s 1.35% senior notes due 2017 ended the week with no major reaction following the announcement late Wednesday that the bank had failed the Federal Reserve's annual bank stress test, according to market sources.

The notes, priced at the start of the month, traded 8 bps tighter than issuance on Friday, a trader said.

Bank of America firms

Bank of America's 2.65% notes due 2019 firmed to 88 bps bid, none offered in trading on Friday afternoon, a trader said.

The paper traded late Thursday at 90 bps bid, 88 bps offered after the bank sold $2.5 billion of the five-year notes at Treasuries plus 97 bps.

Bank of America's new 4% notes due 2024 tightened to 129 bps bid, 127 bps offered in the secondary market on Friday, the trader said.

The notes headed out on Thursday at 134 bps bid, 132 bps offered. Bank of America sold $2.75 billion of the 10-year notes at 137 bps over Treasuries.

Bank of America is a financial services company based in Charlotte, N.C.

Citi holds tight

Citigroup's 1.35% senior notes due 2017 (Baa2/A-/A) traded on Friday at 60 bps bid, 63 bps offered, a trader said.

The New York City-based financial services company sold $1 billion of the notes on March 4 at a spread of Treasuries plus 68 bps.

Bank/brokerage CDS firm

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

Bank of America Corp.'s CDS costs tightened 2 bps to 65 bps bid, 68 bps offered. Citigroup Inc.'s CDS costs firmed 1 bp to 78 bps bid, 81 bps offered. JPMorgan Chase & Co.'s CDS costs declined 1 bp to 55 bps bid, 58 bps offered. Wells Fargo & Co.'s CDS costs firmed 2 bps to 37 bps bid, 40 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 70 bps bid, 73 bps offered. Morgan Stanley's CDS costs tightened 1 bp to 88 bps bid, 91 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 95 bps bid, 98 bps offered.

Paul Deckelman contributed to this review.

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