Primary activity to pick up in week ahead; Verizon eases; secondary quiet on month-end cleanup

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 30 - The month of August closed on a quiet note on Friday with no new issuers hitting the primary market during the session.

Players had expected a subdued week for the days leading up to the extended Labor Day holiday weekend, and the bulk of the week's deals came from foreign financial names.

The week ahead is predicted to bring a number of new issuers to market to kick off September's primary activity.

"Expecting $15 [billion] to $20 billion," one market source said of the Sept. 2 week on Friday.

Bonds ended the day mostly weaker in quiet month-end activity, according to market sources.

"Extremely difficult to get a good feel of what was happening out there with so many players away," a trader said.

Secondary activity slowed as offices thinned out ahead of the holiday weekend, sources said.

"There's nothing," one investment-grade source said. "I'm looking around the trading desk and it's empty."

In trading going out on Friday, Verizon Communications Inc.'s notes eased, while Vodafone Group plc's bonds tightened over the day.

The Markit CDX Series 20 North American Investment Grade index rose 1.6 basis points to a spread of 84 bps.

Verizon weaker

Verizon's bonds moved out 15 bps in trading on Thursday and continued to widen over Friday's session on reports the telecommunications company is in negotiations to purchase Vodafone's 45% stake in Verizon Wireless, a trader said.

Verizon's 2.45% notes due 2022 (A3/A-/A) went out at 129 bps bid, 124 bps offered, compared to where they were seen earlier in the day at 128 bps bid, 122 bps offered, traders said.

New York City-based Verizon sold $1.75 billion of the notes in November at a spread of Treasuries plus 75 bps.

Vodafone tightens

Vodafone's 2.95% notes due 2023 (A3/A-/A-) tightened in afternoon secondary trading on Friday to 133 bps bid, 128 bps offered, according to traders.

The notes traded wider in the morning session at 140 bps bid, 130 bps offered.

The London-based telecommunications company sold $1.6 billion of the notes on Feb. 11 at a spread of Treasuries plus 105 bps.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS costs rose on Friday, a market source said.

Bank of America Corp.'s CDS costs eased 1 bp to 111 bps bid, 115 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 102 bps bid, 106 bps offered. JPMorgan Chase & Co.'s CDS costs widened 1 bp to 89 bps bid, 94 bps offered. Wells Fargo & Co.'s CDS costs rose 1 bp to 64 bps bid, 68 bps offered.

Merrill Lynch's CDS costs increased 1 bp to 104 bps bid, 111 bps offered. Morgan Stanley's CDS costs closed up 1 bp at 140 bps bid, 145 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended 1 bp higher at 131 bps bid, 135 bps offered.

Paul Deckelman contributed to this review

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