Jobs data leaves primary empty, trading at low level; week ahead seen similar; Coventry gains

By Andrea Heisinger

New York, June 3 - The primary side of the investment-grade market emptied out on Friday as payroll numbers were released and some volatility remained.

Unemployment increased to about 9.1% for the month of May. Between this and the previous day's headlines on banks there were no takers for selling bonds.

Issuers will reassess on Monday as the week ended on a volatile note. There was $10.11 billion of bonds in 18 deals sold during the four-day week, according to Prospect News data.

What gets priced in the coming week largely depends on the tone at the top of the week, sources said.

"It's hard to tell," one source said of Monday's volume. "If today had been a better [unemployment] number, we may have been more positive.

"Issuers want to come in. We had some calls today but people were kind of hesitant."

If the tone is OK at the open on Monday there will likely be at least a couple of deals, a source said.

"People are going to go regardless," they said.

A syndicate source at a large desk called the coming week "light" and said it would be similar to the past week with $5 to $10 billion in potential deals.

In the secondary, traders saw relatively low volume to close out the week but were keeping their eye on new paper and bank bonds that were trading heavily for the second day in a row.

Overall volume in the secondary fell to about $6.7 billion.

"It's pretty quiet," a source said late in the day. "Everything kind of froze this morning after unemployment [numbers]."

The source said that isn't unusual, and that "no one makes moves right before the weekend."

Paper from Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley was among the most active for the day, a source said.

Meanwhile, of the bonds sold Thursday by Whirlpool Corp., Southern Natural Gas Co. and Coventry Health Care, Inc., one tightened in trading while one was around issue. Others were not seen.

Coventry jumps tighter

Coventry Health Care had the strongest gains as its 5.45% notes due 2021 tightened nearly 20 bps on the offer side. One source said they were offered at 227 bps in the morning. A second source later quoted them at a bid of 229 bps and slightly better offer of 226 bps.

This was a gain from the 231 bps bid, 223 bps offer right after pricing.

The issuer priced $600 million of the notes at 245 bps over Treasuries.

Whirlpool's 4.85% notes due 2021 were quoted in early morning at 186 bps bid, 181 bps offer. The levels were wrapped around the issuance price of 183 bps over Treasuries.

The new John Deere Capital Corp. notes due 2013 and 2016 were not seen trading, a source said.

Bank bonds remain most active

Trading in bonds from big banks was at high volume for the second day in a row following Moody's Investor Services announcement that it was placing senior debt from Bank of America, Citigroup Inc. and Wells Fargo & Co. under review for possible downgrade.

Three bank bonds that were among the day's most-traded were also changing hands frequently on Thursday.

A 5% note due 2021 from Bank of America sat atop the most actives list in early afternoon, a source said.

Coming in behind this bond was one from Goldman Sachs Group. The bank was subpoenaed by Manhattan prosecutors on Thursday for its role in the financial crisis.

Goldman's 3.625% notes due 2016 were actively trading.

Seeing somewhat lower volume in the secondary was a 5.75% bond due 2021 from Morgan Stanley.

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