Midday Commentary: Bonds open flat; volatile week likely on backlog of data; Verizon rises

By Cristal Cody

Tupelo, Miss., Oct. 21 - Investment-grade bond spreads opened flat but activity heated up early Monday with market sources too busy to talk in the morning session in preparation for the release of a slew of backed-up economic releases, traders said.

"Credit spreads are opening essentially unchanged from Friday's close following a fairly quiet weekend with regards to material news flow," RBC Capital Markets, LLC analysts said in a note on Monday. "Corporate credit spreads appear to be somewhat complacent at current levels, however, the crux of earning's season may assist in guiding spreads in a certain direction."

The Markit CDX North American Investment Grade series 21 index ended Friday unchanged at a spread of 71 basis points.

Spreads tightened 6 bps over the previous week, RBC said.

According to a note from Barclays, "all-in yields on corporate bonds have risen more than 50 [bps] this year."

The September non-farm payroll employment report, delayed during the government shutdown, will be released on Tuesday. Other reports that traders will focus on over the week include trade balance data and initial unemployment claims.

Verizon rises

In the secondary market, Verizon Communication Inc.'s record $49 billion eight-tranche offering of notes (Baa1/BBB+/A-) continues to be among the most actively traded high-grade bonds, sources said.

The New York City-based telecommunication company's 6.55% bonds due 2043 traded early Monday at 116, according to a market source.

Verizon sold $15 billion of the 30-year bonds on Sept. 11 at 99.883.

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