Volume in coming week decent if tone holds; Sprint debt widens, Verizon firms in secondary

By Andrea Heisinger and Cristal Cody

New York, Nov. 24 - There were no new bonds priced in the investment-grade bond market to end the short week, sources said.

By mid-afternoon many syndicate desks were deserted with no new deals to watch.

"There's just nothing going on," one source said.

Talk instead turned to the coming week, which is expected to see decent issuance volume if market conditions hold.

Not much activity was seen in the secondary markets on Wednesday as traders left early for the holiday break.

"Volume's pretty light today," a trader said.

The Markit CDX Series 14 North American investment-grade index firmed 2 basis points to a spread of 93 bps on Wednesday, according to Markit Group Ltd.

Sprint Nextel Corp.'s bonds widened in light trading, while Verizon Communication Inc.'s short-dated notes firmed 2 basis points, sources said.

Government debt fell, sending yields up on mixed economic data as the government saw poor demand for its auction of $29 billion in seven-year notes.

The yield on the 10-year note jumped to 2.91% from 2.77%. The 30-year bond yield rose to 4.28% from 4.19% on Tuesday.

"We had pretty strong selling pressures driven by action in Asia overnight that perpetuated into the U.S. session," said Guy LeBas, chief fixed income strategist with Janney Montgomery Scott. "Trading volume was very, very low. We had weak factory numbers, strong consumer numbers and weak housing numbers - it was all over the place."

Coming calendar looks full

Market conditions remained stable by late Wednesday, but the coming week's calendar is dependent on whether that changes.

"There should be a handful of deals," a source said, "and I've heard away from us that there are some things."

If market stability holds and the rally can hang on, the source said, then those deals will come to the market.

Recent events in Ireland, Portugal and North and South Korea may put that in jeopardy, however.

"Right now that's what everyone's focused on," the syndicate source said.

Another source had said that while this week has been slow, things will pick up because "the end of this year will be busy regardless [of volatility]. It's just a pretty tumultuous time. Corporates will issue regardless."

Sprint paper continues slide

Although Sprint Nextel's debt had recovered a point in the previous week, the bonds widened again in secondary trading Wednesday, sources said.

"Sprint paper continues to be weak. It's down another point," one trader said. "The bonds are down about 11 points since the news came out."

On Nov. 9, Overland Park, Kansas-based Sprint's debt started weakening in the secondary market after the company announced substantial doubt over Clearwire's ability to continue operating. Sprint owns a 54% stake in the wireless communications company.

Earlier this month Moody's Investors Service said it may downgrade the company's current rating of Ba2 over subscriber losses and risk because of its deteriorating relationship with communications company

Elsewhere in the sector, New York-based Verizon Communication's 6.35% notes due 2019 (A3/A/) traded 2 bps tighter at 75 bps, while the 6.25% bonds due 2037 (A3/A/) were unchanged at 140 bps.

AT&T, Inc.'s 5.8% notes due 2019 (A2/A/) traded Wednesday unchanged at 60 bps. The Dallas-based communication's company's 6.55% bonds due 2039 (A2/A/) also were quoted flat at 160 bps from Tuesday's session.

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