No new deals to cap big week of issuance ahead of long weekend; Dow Chemical weakens

By Aleesia Forni and Andrea Heisinger

New York, Nov. 9 - Issuers took Friday off to cap a week of spotty issuance in the high-grade bond market.

The high-volume week saw most sales came on Monday and Tuesday, including the massive $14.7 billion sale in six tranches from AbbVie Inc. to help fund its split from Abbott Laboratories.

There were a few other multi-billion-dollar sales, but the majority of the week's issuance was on the small side and from BBB rated companies.

Corporate issuance for the week was about $22.85 billion, according to Prospect News data.

The tone was "mostly fine" on Friday, but issuers opted to wait until the coming week after the long Veteran's Day holiday weekend.

There is between $15 billion and $20 billion on tap for the coming week, sources said.

Consensus was that the total would likely be closer to the $15 billion end of the range.

"We're being conservative," one source said.

A market source commented that syndicate desks and issuers would take a look at the situation when the market opens on Tuesday.

"It's always dependent on the tone," the market source said.

The Markit CDX Series 18 North American Investment Grade index widened 1 to a spread of 105 basis points on Friday.

The secondary market has "held up very well in the face of stocks," one market source said during the session.

The source added that there was "sort of not a lot going on" as the U.S. bond market will be closed on Monday.

In trading, Dow Chemical Co.'s notes due 2022 were weaker by about 15 basis points, while AbbVie Inc.'s notes due 2022 were active during the session.

Dow Chemical weaker

Thursday's secondary market saw Dow Chemical's $1.25 billion tranche of 3% notes due 2022 were 15 bps wider on Friday.

A market source saw the 10-year notes "wrapped at 160" bps bid. The notes priced at a spread of Treasuries plus 145 bps.

The specialty chemical company is based in Midland, Mich.

AbbVie tightens

The $3.1 billion of 2.9% 10-year paper was the most active tranche of AbbVie's recent $14.7 billion sale of notes during Friday's session.

The 10-year notes were seen 15 bps better, with one market source quoting the tranche at 115 bps bid, 110 bps offered.

The notes sold at a spread of 130 bps over Treasuries.

Pharmaceutical health care products company Abbott Labs, as well as AbbVie, are based in Abbott Park, Ill.

S&P on 2012 bond sales

In a report released on Friday, Standard & Poor's said that global issuance of new corporate bonds through the month of October has surpassed the total for the entirety of 2011.

October saw $242 billion of new bonds, which was less than the $326 billion sold in September. There has been $2.5 trillion of new corporate bonds sold globally through the end of October, according to the report. There was $2.4 trillion sold as of the end of 2011.

In October, $137 billion of new issuance was from investment-grade companies.

Corporate bond yields have declined throughout the year. According to the report, yields on AA rated U.S. industrials were at 2.7% at the end of the third quarter, compared with 3.1% at the end of 2011.

Borrowing costs also remained favorable, with option-adjusted bond spreads declining by 8% from the end of September to Oct. 23.

General Electric Co. was the second-largest U.S.-based corporate issuer in October, pricing $7 billion of new bonds. High-grade new issuance made up 56% of the total priced globally in October, according to the report.

U.S. investment-grade spread dropped to 177 bps as of Oct. 23 compared with 193 bps as of Sept. 30 and 213 bps at the end of the second quarter.

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