Quiet week forecasted with all eyes on Fed; credit spreads widen; Dow Chemical bonds weak

By Aleesia Forni and Cristal Cody

New York, Dec. 11 – The high-grade primary market was silent on Friday, closing out a week that saw roughly $33.8 billion of supply, with nearly half of that total coming from Visa Inc.’s $16 billion jumbo acquisition deal.

The market’s backdrop was “not pretty” to end the week, with oil prices setting a new seven year low on Friday ahead of next week’s all-important Federal Reserve interest rate decision.

Meanwhile, corporate investment-grade bond funds saw $1.55 billion of outflows for the week ended Dec. 9, according to Lipper U.S. Funds Flows.

The number follows last week’s $54.7 million of outflows and brings the year-to-date total to roughly $11.8 billion.

Sources are calling for a slow week ahead, with the market focused on the two-day Federal Open Market Committee meeting, which is predicted to be the first rate hike the market has seen in nearly 10 years.

“I wouldn’t be too surprised if we had a couple go before the Fed,” a market source said, though he added it would depend on the tone of the market at the front end of the week.

Investment-grade credit spreads widened on Friday. The Markit CDX North American Investment Grade 25 index opened the session 2 bps softer and closed a total of 9 bps weaker at a spread of 97 bps.

In the secondary market, Dow Chemical Co.’s notes (Baa2/BBB/BBB) weakened after the company announced it will merge with DuPont Co.

Bank and financial paper traded mostly better over the day.

Morgan Stanley’s 4% senior notes due 2025 firmed 2 bps.

JPMorgan Chase & Co.’s 4.25% subordinated notes due 2027 tightened 4 bps.

Bank of America Corp.’s 3.875% senior notes due 2025 traded 3 bps tighter in the secondary market.

Dow Chemical softens

Dow’s 8.55% notes due 2019 widened about 11 bps over the session to 105 bps bid, according to a market source.

The company sold $3.25 billion of the bonds on May 7, 2009 at a spread of Treasuries plus 525 bps.

The specialty chemicals company is based in Midland, Mich.

Morgan Stanley improves

Morgan Stanley’s 4% notes due 2025 firmed 2 bps on Friday to head out at 138 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.

JPMorgan firms

JPMorgan Chase’s 4.25% subordinated bonds due 2027 improved 4 bps in secondary trading to 200 bps bid, a market source said.

JPMorgan Chase sold $2 billion of the bonds (Baa1/A-/A) on Sept. 23 at a spread of Treasuries plus 215 bps.

The financial services company is based in New York City.

Bank of America better

Bank of America’s 3.875% senior notes due 2025 tightened 3 bps over the day to 147 bps bid, a source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at 167 bps over Treasuries.

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

© 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.