Morning Commentary: Investment-grade spreads weaken; State Street, Barclays firm from December

By Cristal Cody

Tupelo, Miss., Jan. 6 – High-grade credit spreads remained weak early Tuesday as the market adjusts to oil prices, while primary action is expected later in the day from issuers including the Ford Motor Credit Co. and FedEx Corp., market sources said.

The Markit CDX North American Investment Grade series 23 index eased 2 basis points to a spread of 69 bps on Monday.

“Credit spreads have been moving wider since the calendar flipped to 2015 but have yet to hit the levels reached on Dec. 15 – the widest levels in 2014,” RBC Capital Markets, LLC analysts said in a note on Tuesday.

In the secondary market, State Street Corp.’s 3.3% senior notes due 2024 that priced in December traded tighter, a market source said.

Barclays plc’s 2.75% senior notes due 2019 brought in November have tightened since mid-December, according to a market source.

State Street better

State Street’s 3.3% notes due 2024 traded better at 98 bps offered, according to a market source.

State Street sold $1 billion of the 10-year notes (A1/A+/AA-) on Dec. 10 at a spread of Treasuries plus 115 bps.

The financial holding company is based in Boston.

Barclays improves

Barclays’ 2.75% senior notes due 2019 were quoted tighter at 112 bps offered, a market source said.

The paper traded in mid-December at 125 bps offered.

Barclays sold $2 billion of the notes (A3/A-/A) at Treasuries plus 120 bps on Nov. 3.

The financial services company is based in London.

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