Quiet session ahead of Easter holiday; Bank of America, Ford Motor Credit tighten in secondary

By Aleesia Forni and Cristal Cody

Virginia Beach, April 2 – The high-grade bond market was muted on Thursday, with desks thinly staffed ahead of the extended Easter-holiday weekend.

This kept the week’s total supply at a mere $3,925,000,000, the smallest weekly new issuance total of 2015 thus far.

With companies heading into blackouts ahead of earnings season, and on the heels of March’s more than $163 billion of new issuance, primary activity is likely to remain measured in the coming weeks.

Sources are calling for around $10 billion of new issuance for the week ahead.

“We could see around $80 billion for April,” one market source added.

Meanwhile, Lipper reported inflows of $491 million into corporate high-grade bond funds for the week ended April 1, the lowest inflow of the year so far.

The total was down from last week’s inflows of $1.21 billion, bringing the year-to-date total inflows to $25.126 billion.

Investment-grade bonds traded mostly better in quiet activity on Thursday ahead of the long holiday weekend, sources said.

Bank of America NA’s new 1.65% senior bank notes due 2018 were quoted 10 basis points tighter than issuance.

Ford Motor Credit Co. LLC’s 2.459% senior notes due 2020 headed out 7 bps better than where the bonds priced a week ago.

Citigroup Inc.’s 3.875% subordinated notes due 2025 were not active in secondary trading over the day but remain about 2 bps tighter than issuance.

Goldman Sachs Group Inc.’s senior notes (Baa1/A- /A) reopened in the previous week traded flat to tighter during the session, going out 7 bps to 10 bps better than pricing.

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 62 bps.

Bank of America tighter

Bank of America’s 1.65% notes due 2018 (A2/A/A) traded tighter at 65 bps offered on Thursday, a trader said.

The notes priced in a $1.75 billion offering on March 20 at a spread of Treasuries plus 75 bps.

Parent company Bank of America Corp. is a financial services company based in Charlotte, N.C.

Ford Motor Credit firms

Ford Motor Credit’s 2.459% notes due 2020 traded late Thursday afternoon at 103 bps bid, 98 bps offered, a trader said.

Ford Motor Credit sold $600 million of the notes (Baa3/BBB-/BBB-) on March 24 a spread of 110 bps over Treasuries.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

Citigroup steady

Citigroup’s 3.875% subordinated notes due 2025 (Baa3/BBB+/A-) were not seen in Thursday’s session but traded on Wednesday at 191 bps bid, a trader said.

Citigroup sold $1 billion of the notes on March 19 at a spread of Treasuries plus 193 bps.

The financial services provider is based in New York.

Goldman mostly better

Goldman Sachs’ 2.6% notes due 2020 firmed 2 bps to 105 bps bid on Thursday, a market source said.

Goldman priced a $700 million add-on to the issue on March 25 at Treasuries plus 112 bps. The original $1 billion tranche of notes sold at 135 bps over Treasuries on Jan. 20.

Goldman’s 3.5% notes due 2025 were flat at 135 bps bid, the source said.

The 10-year notes were reopened on March 25 in an $800 million tap at Treasuries plus 145 bps.

The original $1.7 billion offering of notes priced at 170 bps over Treasuries on Jan. 20.

The financial services company is based in New York City.

Bank/broker CDS costs flat

Investment-grade bank and brokerage CDS prices were flat on Thursday, according to a market source.

Bank of America Corp.’s CDS costs were unchanged at 64 bps bid, 67 bps offered. Citigroup’s CDS costs were also flat at 73 bps bid, 76 bps offered. JPMorgan Chase & Co.’s CDS costs remained at 63 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were flat at 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs were unchanged at 67 bps bid, 72 bps offered. Morgan Stanley’s CDS costs were unchanged at 74 bps bid, 77 bps offered. Goldman Sachs Group’s CDS costs were flat at 84 bps bid, 87 bps offered.

Stephanie N. Rotondo contributed to this review.

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