High-grade primary silent; funds see record outflows; Verizon firms; Morgan Stanley eases

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 24 – Potential bond issuers stood down on Thursday amid a weaker market tone as Lipper reported record outflows from investment-grade corporate bond funds.

For the week ended Wednesday, Lipper reported $3.52 billion of outflows for the asset class, the largest outflow ever for high-grade bond funds.

This figure comes on the heels of last week’s $737 million of outflows, trimming the year-to-date total inflows to $17 billion.

Thursday’s empty session kept the week’s total new issuance at $26.4 billion, with the bulk of that total priced during Monday’s blockbuster $17 billion session.

High-grade bonds were mixed in secondary trading over the session, and credit spreads widened.

Verizon Communications Inc.’s 3.5% notes due 2024 firmed 4 bps.

AT&T Inc.’s bonds (/BBB+/A-) widened 7 bps to 10 bps in the secondary market.

Morgan Stanley’s 4% senior notes due 2025 headed out 2 bps weaker.

In other trading, Home Depot Inc.’s 4.25% senior notes due 2046 were unchanged.

The Markit CDX North American Investment Grade 25 index eased 3 bps to a spread of 86 bps on Thursday.

Bank/brokerage CDS costs rise

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

Bank of America Corp.’s CDS costs rose 2 bps to 81 bps bid, 84 bps offered. Citigroup Inc.’s CDS costs were also up 2 bps to 88 bps bid, 91 bps offered. JPMorgan Chase & Co.’s CDS costs were 2 bps higher at 80 bps bid, 85 bps offered. Wells Fargo & Co.’s CDS costs increased 1 bp to 60 bps bid, 63 bps offered.

Merrill Lynch’s CDS costs were up 2 bps to 84 bps bid, 87 bps offered. Morgan Stanley’s CDS costs ended 2 bps higher at 88 bps bid, 91 bps offered. Goldman Sachs Group, Inc.’s CDS costs remained at 95 bps bid, 97 bps offered.

Verizon firms

Verizon’s 3.5% notes due 2024 traded 4 bps better on Thursday to 149 bps bid, a market source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at a spread of Treasuries plus 135 bps.

The telecommunications company is based in New York City.

AT&T widens

AT&T’s 3.4% notes due 2025 widened 10 bps on Thursday to 185 bps bid, a market source said.

The company sold $5 billion of the notes on April 23 at a spread of 150 bps over Treasuries.

AT&T’s 4.75% bonds due 2046 were quoted 7 bps weaker at 230 bps bid.

AT&T sold $3.5 billion of the bonds in the April 23 offering at 215 bps over Treasuries.

The telecommunications company is based in Dallas.

Morgan Stanley eases

Morgan Stanley’s 4% notes due 2025 traded 2 bps weaker over the session at 160 bps bid, according to a market source.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

Home Depot stable

Home Depot’s 4.25% notes due 2046 were unchanged on the day at 125 bps bid, 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.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.