Primary closes with no deals ahead of holiday weekend; volume thins; AT&T, financials improve

By Andrea Heisinger and Cristal Cody

New York, Dec. 22 - The high-grade debt market was in virtual shut-down mode on Thursday as syndicate desks were sparsely staffed.

"Wasn't much going on today," a market source said. "It was pretty boring, like it has been all week. I think people were finishing end-of-year stuff, but otherwise a non-event."

A second source said that "there weren't even any new deals to watch" in trading.

There aren't any new deals on the horizon in the near future, meaning the remainder of 2011.

"We knew last week that this was going to be a long, slow week, and it was," a syndicate source said. "I think everyone's hoping January picks up."

There isn't any issuance expected ahead of Friday's early market close, sources said.

On Thursday, bonds traded tighter in the thin trading. The Markit CDX Series 17 North American Investment Grade index firmed 3 basis points to a spread of 122 bps.

Telecom paper traded tighter after ending mostly unchanged on Wednesday, a bond source said.

AT&T, Inc.'s bonds firmed 4 bps to 5 bps over the day.

Investment-grade bank and brokerage credit default swap costs were lower on improved sentiment for the financial sector.

Bank paper CDS costs traded 5 bps to 15 bps lower. Bank of America's CDS costs were 15 bps lower at 385 bps bid, 405 bps offered. JPMorgan's CDS costs traded 5 bps lower at 135 bps bid, 145 bps offered.

Brokerage company paper CDS costs fell 10 bps to 15 bps. Merrill Lynch's CDS costs were 15 bps lower at 435 bps bid, 455 bps offered. Goldman Sachs' CDS costs traded 10 bps lower at 305 bps bid, 325 bps offered.

Government bonds traded higher on Thursday in thin, choppy trading.

The 10-year benchmark note yield fell 2 bps to 1.95%. The 30-year bond yield dropped 2 bps to 2.98%.

AT&T firms

AT&T's bonds firmed in the secondary market on Thursday, a source said.

The 5.8% notes due 2019 were seen trading 5 bps tighter at 107 bps.

The issue was sold in 2009 at a spread of 300 bps over Treasuries.

The telecommunications company is based in Dallas.

Paul Deckelman contributed to this review

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