Investment-grade primary closes on quiet note; bank paper down; credit spreads ease

By Aleesia Forni and Cristal Cody

Virginia Beach, April 17 – The high-grade bond market closed the trading session on Friday with no new deals pricing and as stocks plummeted on intensifying Greece concerns and changes in Chinese market regulations.

In total, around $17.4 billion of high-grade bonds sold this week, coming within predictions of around $15 billion to $20 billion of supply.

Meanwhile, Lipper reported the first outflows of 2015 for corporate investment-grade bond funds.

For the week ended April 15, high-grade bond funds saw $384 million of outflows.

The outflows follow last week’s year-low inflows of $211 million and brings the year-to-date total inflows to $24.95 billion.

Activity in the primary sphere is expected to remain similar in the week ahead, with earnings blackouts continuing to put a hindrance on supply.

Sources are calling for around $15 billion to $20 billion of supply.

Investment-grade bonds and credit spreads traded mostly weaker on Friday, according to market sources.

The Markit CDX North American Investment Grade series 23 index eased 2 basis points to a spread of 64 bps.

In the secondary market, Bank of America Corp.’s 4% notes due 2025 widened 5 bps.

JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 5 bps.

Morgan Stanley’s 2.65% notes due 2020 widened more than 5 bps in trading.

General Electric Capital Corp.’s bonds were unchanged on the week.

Bank of America eases

Bank of America’s 4% notes due 2025 eased 5 bps to 208 bps bid over the session, a market source said.

Bank of America sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 headed out 5 bps weaker at 124 bps bid on Friday, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Morgan Stanley widens

Morgan Stanley’s 2.65% notes due 2020 widened to 100 bps offered in the secondary market, a source said.

The notes (Baa2/A-/A) were quoted at 93 bps offered on Thursday.

Morgan Stanley sold $2.5 billion of the notes on Jan. 22 at Treasuries plus 130 bps.

The financial services company is based in New York City.

GE Capital unchanged

General Electric Capital’s 2.2% notes due 2020 remained flat over the week at 44 bps bid, according to a market source.

The company sold $2 billion of the notes (A1/AA+/) on Jan. 6 at Treasuries plus 75 bps.

General Electric Capital’s bonds tightened 10 bps to 15 bps on April 10 after parent company General Electric Co. announced it intends to sell off most of its financial products and services assets.

General Electric Capital is based in Norwalk, Conn.

Bank/broker CDS costs flat

Investment-grade bank and brokerage CDS prices were mostly higher on Friday, according to a market source.

Bank of America’s CDS costs were 1 bp higher at 61 bps bid, 66 bps offered. Citigroup Inc.’s CDS costs were up 1 bp to 70 bps bid, 75 bps offered. JPMorgan Chase’s CDS costs rose 1 bp to 59 bps bid, 64 bps offered. Wells Fargo & Co.’s CDS costs also rose 1 bp to 40 bps bid, 43 bps offered.

Merrill Lynch’s CDS costs were up 1 bp to 64 bps bid, 69 bps offered. Morgan Stanley’s CDS costs were also 1 bp higher at 71 bps bid, 76 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 79 bps bid, 80 bps offered.

Stephanie N. Rotondo contributed to this review

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