Morning Commentary: High-grade credit spreads inch wider; MassMutual, Horace Mann deals firm

By Aleesia Forni

New York, Nov. 19 – High-grade credit spreads were leaking wider during the early part of the session on Thursday following the release of the Federal Reserve’s October meeting minutes, which pointed to a potential rate increase in December.

The Markit CDX North American Investment Grade 25 index was flat at a spread of 81 basis points.

Recent deals continued to trade better in the secondary market, with MassMutual Global Funding II and Horace Mann Educators Corp. both tightening following their respective new issues, which priced during the quieter session on Wednesday.

MassMutual Global Funding’s $650 million of 2.45% five-year funding agreement-backed notes (Aa2/AA+/AA+) traded 4 bps tighter on Thursday at 76 bps bid, 73 bps offered, a market source said.

The notes sold at Treasuries plus 80 bps on Wednesday.

Bookrunners were Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

The issuing unit of Massachusetts Mutual Life Insurance Co. is based in Springfield, Mass.

And Horace Mann Educators’ $250 million of 4.5% 10-year senior notes (Baa3/BBB/BBB) were quoted 1 bp better at 224 bps bid early Thursday.

The notes priced at Treasuries plus 225 bps on Wednesday via bookrunners J.P. Morgan Securities LLC and Keefe, Bruyette & Woods.

The Springfield, Ill., insurance company said the proceeds will be used redeem or repay outstanding debt, including its 6.85% senior notes due April 15, 2016 and borrowings under a bank credit facility, as well as for general corporate purposes.

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