Issuers stand down as jobs report, Europe headlines weaken tone; banks, telecom bonds widen

By Andrea Heisinger and Cristal Cody

New York, April 9 - Issuers stood down on Monday after the market opened on a weak tone following a long holiday weekend.

The empty primary was due to a variety of factors, sources said. Many are still on vacation from the long weekend for the beginning of Passover and Easter. European markets were closed Monday.

Also, a labor report for March was released last Friday showing that the number of jobs added during that month was about half of what was expected. The market tone also took a dive in the latter half of the past week due to more negative news out of Europe dealing with the debt crisis.

"Equities were down," a syndicate source said of the open Monday. Treasury yields also were down, bringing bond prices up.

Although it seemed the week was off to a slow start, there is only $5 billion to $10 billion in volume expected.

"Assuming the tone's better tomorrow, we could have a couple of people venture into the market," a source said late in the day.

"We talked to a couple of people, but they weren't very positive calls today. It was pretty bad out there."

Bonds traded weaker on the day.

The Markit CDX Series 18 North American investment-grade index closed Monday at a spread of 102 bps.

"Very light volumes," a trader said.

Apache Corp.'s new 10-year notes widened about 5 basis points.

Cable and telecom bonds traded 3 bps to 15 bps wider.

"AT&T is 3 bps wider," a trader said.

CenturyLink, Inc.'s bonds traded 15 bps wider.

Bank and financial paper widened 5 bps to 20 bps on the day, led by Morgan Stanley.

Investment-grade bank and brokerage credit default swaps costs rose on Monday.

Banks were wider. Bank of America's CDS costs rose 20 bps to 265 bps bid, 270 bps offered. Citi's CDS costs traded 20 bps wider at 245 bps bid, 250 bps offered.

Brokers widened. Merrill Lynch's CDS costs were 15 bps wider at 280 bps bid, 290 bps offered.

Morgan Stanley's CDS costs traded 20 bps wider at 365 bps bid, 375 bps offered. Goldman Sachs' CDS costs widened 4 bps to 270 bps bid, 280 bps offered.

Treasuries traded stronger after the weaker job numbers released Friday. The benchmark 10-year note yield fell 1 bp to 2.04% on Monday from Friday's session and down from 2.18% on Thursday. The 30-year bond yield dropped 3 bps to 3.19% on the day and down 17 bps from Thursday's session.

Apache weaker

Apache's 3.25% notes due 2022 widened 5 bps to 105 bps bid, 100 bps offered, a trader said on Monday.

The company priced $1.1 billion of the 10-year notes (A3/A-/A-) at 100 bps over Treasuries the previous week on Wednesday.

The Houston-based energy company does exploration, transportation and production for natural gas, crude oil and natural gas liquids.

CenturyLink widens

CenturyLink's 7.65% bonds due 2042 widened 15 bps to 497 bps bid, 487 bps offered, a trader said.

The company sold $650 million of the bonds (Baa3/BB/BBB-) on March 5 at a spread of Treasuries plus 450 bps.

The broadband and telecommunications company is based in Monroe, La.

Morgan Stanley eases

Morgan Stanley's 5.5% notes due 2021 widened 20 bps on the day to 415 bps bid, 400 bps offered, a trader said.

The notes were quoted on Thursday at 363 bps bid.

The issue priced in a $1 billion offering (A2/A/A) on Oct. 27 at a spread of 335 bps over Treasuries.

The investment bank is based in New York.

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