Coming week seen moderately busy for high-grade bonds; JPMorgan, Morgan Stanley widen

By Andrea Heisinger

New York, Nov. 23 - The short week ended on Wednesday with no new deals in the investment-grade bond market.

After dismal headlines late on Monday, sources said issuers began looking at the week after Thanksgiving to sell debt.

"We should be relatively busy," they said. "We're hearing $10 to $15 billion for the Street. That could be conservative."

Only a handful of issuers looked at the market for the week before deciding the market tone wasn't good enough to price anything, sources said.

"There weren't a ton," a syndicate source said. "We had a couple. Everyone knew it was a short week, so they weren't really looking at it."

A dismal sale of German bonds on Wednesday coupled with news that Fitch Ratings could downgrade France's credit rating from AAA did not help the market tone, sources said.

Financial bonds were again among the most-actively traded for the day but did not dominate the top five spots as they did the first two days of the week.

Overall trading volume was "less than $3.5 billion" as of early afternoon.

"We'll be lucky to hit that today," a trader said. "That whole Europe thing really hit us."

JPMorgan Chase & Co. had one of the most-traded bonds and Morgan Stanley paper was also changing hands, sources said.

"Morgan Stanley really got pummeled," a source said.

The Morgan Stanley 5.5% notes due 2021 were trading 30 basis points wider than the previous day, at 590 bps, the source said.

Bank of America Corp. bonds "also continued to get hit every day," they said.

A trader said that there wasn't much activity in Eksportfinans ASA's paper on news that the lender to Norway's export industry had been cut to a junk rating by Moody's Investors Service.

The issuer's 5.5% notes due 2016 were quoted trading a price of 92 bid, 94 offered.

Treasury bond yields continued to contract. The five-year note was 1 bp better than the previous day at 0.86%, a source said, while the 10-year note came in 4 bps to 1.88%. The 30-year bond also tightened by 4 bps from the previous day, to yield 2.84%.

JPMorgan most active

A bond from JPMorgan Chase was quoted trading wider than it was the previous day, a trader said.

The bank's 4.35% paper due 2021 was priced in October and was trading about 44 bps wider than where it initially priced. It was also about 4 bps worse than on Tuesday.

Morgan Stanley's 5% step-up callable notes due 2025 were sold at par and quoted at that same price, trading at high volume.

Two issues from American International Group Inc. were also on the most-active trading list.

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