Morning Commentary: Primary action set; Kellogg better; Johnson & Johnson flat; CDX firms

By Cristal Cody

Tupelo, Miss., Feb. 29 – The investment-grade bond market opened to a round of primary action expected on Monday.

Issuers set to tap the market include Bank of America Corp., Hyatt Hotels Corp., SunTrust Banks, Inc. and Public Service Electric and Gas Co.

Exxon Mobil Corp. is marketing eight tranches of notes, including two tranches of floating-rate notes.

Credit spreads continue to improve after tightening 2 basis points on Friday. The Markit CDX North American Investment Grade index opened 1 bp tighter at a spread of 109 bps.

The three-month Libor yield was up 1 bp to 64 bps on Monday.

In the secondary market, Kellogg Co.’s senior notes (Baa2/BBB/BBB) traded better.

Johnson & Johnson’s senior notes (Aaa/AAA/AAA) were mostly unchanged over the morning.

Kellogg stronger

Kellogg’s 3.25% notes due 2026, which priced on Thursday in a $750 million tranche at Treasuries plus 157 bps, tightened about 10 bps from Friday to 142 bps offered, a market source said.

Kellogg’s 4.5% bonds due 2046 traded nearly 10 bps better from Friday at 186 bps offered in early secondary trading.

The company sold $650 million of the notes on Thursday at a spread of Treasuries plus 200 bps.

The maker of cereal and convenience foods is based in Battle Creek, Mich.

Johnson & Johnson stable

Johnson & Johnson’s 2.45% notes due 2026 were unchanged early Monday at 69 bps offered, according to a market source.

The company sold $2 billion of the notes on Thursday at a spread of Treasuries plus 75 bps.

The consumer products company is based in New Brunswick, N.J.

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