Morning Commentary: Investment-grade bonds mixed; Citigroup notes ease; Charter mildly better

By Cristal Cody

Tupelo, Miss., Nov. 6 – High-grade bonds were mixed in early trading on Friday after the Labor Department released a stronger-than-expected jobs report that increased speculation of a December rate hike.

The Labor Department said 271,000 jobs were added to the October non-farm payrolls report, much higher than the 185,000 forecast. The unemployment rate dropped to 5.0% from 5.1%, the best level since 2008.

In the secondary market, Citigroup Inc.’s 4.4% subordinated notes due 2027 eased 2 basis points.

Charter Communications Inc.’s 4.908% notes due 2025 traded about 1 bp tighter.

The three-month Libor yield was up 1 bp early Friday at 34 bps.

The Markit CDX North American Investment Grade 25 index was mostly unchanged at the start of the day at a spread of 78 bps.

Secondary trading was lighter on Thursday with $13.7 billion of high-grade issues traded, down from $17.11 billion of bonds traded on Wednesday, according to Trace.

Citigroup softens

Citigroup’s 4.4% subordinated notes due 2027 were quoted 2 bps wider at 228 bps offered in secondary trading, a source said.

The notes traded late Thursday afternoon 5 bps wider at 231 bps bid.

Citigroup sold $1.5 billion of the notes (Baa3/ BBB+/A-) in a reopening on Oct. 23 at 233 bps over Treasuries. The company originally sold $2 billion of the notes on Sept. 23 at Treasuries plus 235 bps.

The financial services company is based in New York.

Charter modestly better

Charter Communications’ 4.908% notes due 2025 firmed about 1 bp to 232 bps offered early Friday, a market source said.

The notes (Ba1/BBB-) headed out on Thursday unchanged at 234 bps bid.

The company sold $4.5 billion of the bonds on July 9 at a spread of Treasuries plus 260 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

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