Midday Commentary: High-grade bonds tighten modestly at open; Santander firms on offered side

By Cristal Cody

Tupelo, Miss., Nov. 4 - Investment-grade bonds opened marginally tighter in trading early Monday, according to market sources.

The Markit CDX North American Investment Grade series 21 index closed on Friday unchanged at a spread of 73 basis points.

The investment-grade space generated 1.48% of total return in October, according to a RBC Capital Markets, LLC note on Monday.

"This is fairly impressive considering the various headwinds that risk assets faced heading into the month (U.S. government shutdown, mixed economic data, tepid earnings season, etc.)," the note said. "Investment grade and high yields spreads ran out of steam heading into month-end and are bouncing off recent resistance levels."

In the secondary market, Santander UK plc's 5% subordinated notes due 2023 firmed on the offered side, a trader said.

Coca-Cola Co.'s 3.2% senior notes due 2023 eased on the offered side from Friday's session, a trader said.

Santander better

Santander's 5% notes due 2023 were quoted early in the day at 229 bps offered, a trader said.

The notes were seen headed out on Friday at 239 bps bid, 234 bps offered.

Santander (A2/A/A) sold $1.5 billion of the notes with a spread of Treasuries plus 250 bps on Thursday.

The financial services company is based in London.

Coca-Cola eases

Coca-Cola's 3.2% notes due 2023 (Aa3/AA-/A+) traded at 71 bps offered during the morning session on Monday, according to a trader.

The notes were quoted on Friday afternoon at 73 bps bid, 69 bps offered.

Coca-Cola sold $1.5 billion of the 10-year issue at Treasuries plus 70 bps on Tuesday.

The beverage company is based in Atlanta.

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