Second-quarter issuance starts strong, ends weak; trading slows; financials, new bonds firm

By Sheri Kasprzak and Cristal Cody

New York, July 1 - Ahead of the Independence Day holiday, new issuance was nearly non-existent Friday.

New issue volume has remained sluggish during the latter half of the second quarter, reported Jody Lurie, corporate credit analyst with Janney Montgomery Scott LLC.

"All plot and no ending," Lurie wrote in a report released Friday.

"The second quarter started out strong in terms of new issuance but ended slowly after global events brought hesitation from both investors and issuers."

Lurie reported that second-quarter issuance of $324 billion was slightly below last year's level and $76 billion below the first quarter.

"June was the slowest month in dollar terms, as expected with the Greek debt problem and negative U.S. economic data causing spreads to widen significantly," Lurie noted.

Secondary high-grade trading slowed to a crawl on Friday as most syndicate desks filed out early for the day.

"Barely," one trader said, laughing when asked about activity. "Not seeing much activity in corporates at all. I'm already getting a lot of messages about people gone. 'Have a good holiday.'"

Market tone remained good, though, with bonds seen tighter overall.

The Markit CDX Series 15 North American Investment Grade index firmed Friday 2 basis points to a spread of 90 bps, according to Markit Group Ltd.

Bank of America Corp.'s 10-year notes traded early Friday 3 bps tighter.

New York-based Goldman Sachs Group, Inc.'s notes also were stronger.

Amgen Inc.'s notes saw some activity early in the day and continued to firm. The company priced $3 billion in three tranches of senior notes (A3/A+/A-) on Monday.

Nokia Corp.'s bonds also ended the week tighter.

Treasuries slipped on light trading and on stronger economic data on Friday. The 10-year note yield rose 2 bps to 3.18%. The 30-year bond yield increased 2 bps to 4.39%.

Bank of America stronger

The 5% notes due 2021 from Charlotte, N.C.-based Bank of America were seen early Friday 3 bps tighter at bid at 195 bps. "That was pretty early," the trader said.

The notes firmed more than 15 bps in trading in the last half of the week after the bank announced a settlement over its mortgage-backed securities unit, Countrywide, on Wednesday.

Bank of America priced the notes on May 10 at a spread of 185 bps over Treasuries.

Goldman Sachs firms

Goldman Sachs Group's 6% notes due 2020 traded at 168 bps offered on Friday, a trader said.

The New York-based financial services company priced the notes on May 26, 2010 at a spread of 280 bps over Treasuries.

Amgen tighter

Amgen's notes ended the week firmer from where the company priced on Monday, a trader said Friday.

The $750 million of 2.3% five-year notes priced at a spread of Treasuries plus 90 bps. On Friday, the notes were seen at 71 bps offered.

The $1 billion tranche of 4.1% 10-year notes sold at a spread of 120 bps over Treasuries were "offered this morning at 93," the trader said.

Amgen's last tranche of 5.65% bonds due 2042 priced at Treasuries plus 140 bps and traded Friday at 120 bps offered.

The issuer is based in Thousand Oaks, Calif.

Nokia firms

Nokia's notes traded tighter on Friday, continuing a streak seen midweek. The 5.375% notes due 2019 were offered at 271 bps early Friday.

"That name was offered at 275 yesterday," a trader said.

On Tuesday, the notes were quoted at 293 bps bid, 283 bps offered.

Nokia's notes have rebounded from some of the weakness brought in June after Fitch downgraded the company two notches to BBB- from BBB+.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

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