Morning Commentary: Reynolds American notes tighten; Home Depot mostly unchanged

By Cristal Cody

Tupelo, Miss., June 11 – Investment-grade bonds traded mostly unchanged to better early Thursday after credit spreads improved in the previous day’s session, sources said.

Reynolds American Inc.’s senior notes (Baa3/BBB-) that priced on Tuesday tightened more than 15 basis points in the secondary market.

Home Depot Inc.’s 4.25% senior notes due 2046 traded flat to 1 bp weaker.

The three-month Libor yield rose 1 bp to 29 bps early Thursday.

The Markit CDX North American Investment Grade series 23 index closed 2 bps tighter at a spread of 66 bps on Wednesday.

Reynolds American stronger

Reynolds American’s 4.45% notes due 2025 firmed to 190 bps offered in secondary trading, a market source said.

The company sold $2.5 billion of the notes on Tuesday at a spread of Treasuries plus 205 bps.

Reynolds American’s 5.7% bonds due 2035 tightened to 239 bps offered.

Reynolds American sold $750 million of the bonds at Treasuries plus 255 bps.

The company’s 5.85% bonds due 2045 traded stronger at 247 bps offered. The bonds priced in a $2.25 billion offering at Treasuries plus 270 bps.

Reynolds American is a Winston-Salem, N.C.-based manufacturer and marketer of cigarettes and other tobacco products.

Home Depot mostly flat

Home Depot’s 4.25% notes due 2046 traded flat to 1 bp wider at 130 bps offered, a market source said.

The company sold $1.25 billion of the bonds (A2/A/A) on May 28 at Treasuries plus 135 bps.

The home improvement retailer is based in Atlanta.

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