High-grade issuers take break ahead of $10 billion-$15 billion forecast; new issues see demand

By Cristal Cody and Aleesia Forni

Tupelo, Miss., July 12 - Corporate issuers priced more than $18 billion of new offerings through Thursday but took a breather on Friday while bank earnings dominated the market's focus, market sources said.

"We're just getting ready for blackouts next week, so there's not much going on today," one high-grade bond source said. "We still expect issuance next week for borrowers like JPMorgan that typically issue after earnings."

Both JPMorgan Chase & Co. and Wells Fargo & Co. released second-quarter earnings on Friday.

Other banks scheduled to release quarterly earnings in the upcoming week include Citigroup Inc., Goldman Sachs Group, Inc. and Bank of America Corp.

About $10 billion to $15 billion of issuance is expected in the week ahead, another informed source said.

"There's still a blackout, so it's not going to be too heavy," the source said.

Recently priced deals were met with strong demand during the week, sources said on Friday.

The high-grade secondary bond market saw both tranches of LyondellBasell Industries NV's recent offering trading better at mid-morning, one trader said.

A source at another desk noted a strong performance from General Electric Capital Corp.'s recently priced deal.

The trader quoted the company's fixed-rate tranche of notes, which priced during Tuesday's session, 10 basis points better.

Bank, brokerage CDS costs rise

Investment-grade bank and brokerage credit default swap costs rose on Friday.

Bank of America's CDS costs were 3 bps higher at 118 bps bid, 123 bps offered. Citi's CDS costs rose 3 bps to 113 bps bid, 118 bps offered. JPMorgan's CDS costs increased 2 bps to 88 bps bid, 92 bps offered. Wells Fargo's CDS costs were 1 bp higher at 68 bps bid, 73 bps offered.

Merrill Lynch's CDS costs rose 2 bps to 101 bps bid, 111 bps offered. Morgan Stanley's CDS costs increased 2 bps to 155 bps bid, 160 bps offered. Goldman Sachs' CDS costs were also 2 bps higher at 144 bps bid, 149 bps offered.

LyondellBasell notes firm

LyondellBasell's $1.5 billion of senior notes that priced in two tranches on Thursday were trading better during Friday's session, according to a market source.

The company's $750 million of 4% 10-year notes traded 6 bps tighter at 154 bps bid during the session following Thursday's sale at a spread of Treasuries plus 160 bps.

The $750 million of 5.25% 30-year bonds were also quoted 6 bps better at 174 bps bid. The notes were priced at 185 bps over Treasuries.

The notes were issued through financing subsidiary LYB International Finance BV and are guaranteed by LyondellBasell Industries.

LyondellBasell is a Houston-based chemical company that has executive offices in London and is incorporated in the Netherlands.

GE Capital tightens

GE Capital's $1.25 billion of 1.5% three-year notes traded 3 bps better on the day at 73 bps bid, 68 bps offered, a trader said near the end of Friday's session.

The company sold the notes with a spread of Treasuries plus 83 bps on Tuesday.

The sale also included $900 million of two-year floating-rate notes priced at par to yield Libor plus 38 bps and a $1.35 billion tranche of three-year floaters priced at par to yield Libor plus 65 bps.

The funding arm of General Electric Co. is based in Norwalk, Conn.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.