Morning Commentary: High-grade bank, financial paper mixed; Bank of America firms

By Cristal Cody

Eureka Springs, Ark., March 17 – Investment-grade bank and financial paper traded mostly stronger on the week but opened Thursday mixed in the secondary market.

Bank of America Corp.’s 4.45% medium-term subordinated notes due 2026 were quoted 3 basis points tighter early Thursday. The notes are trading about 20 bps tighter from a week ago and 41 bps better than where the paper priced in late February.

HSBC Holdings plc’s 4.3% senior notes due 2026 were quoted 3 bps softer over the morning. The notes have firmed 21 bps since the previous week and more than 40 bps since issuance. They priced on March 1.

The Markit CDX North American Investment Grade index was unchanged at the start of the day at a spread of 86 bps.

Three-month Libor was stable at 64 bps.

Secondary trading volume has ticked up over the week with $20.59 billion of investment-grade issues traded on Wednesday, compared to $19.25 billion on Tuesday and $14.21 billion on Monday, according to Trace.

Bank of America firms

Bank of America’s 4.45% subordinated notes due 2026 firmed 3 bps to 229 bps offered, a market source said.

The notes traded on Friday at 250 bps offered.

Bank of America sold $2 billion of the notes on Feb. 29 at a spread of 270 bps plus Treasuries.

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

HSBC eases

HSBC Holdings’ 4.3% notes due 2026 traded 3 bps softer early Thursday at 207 bps offered, according to a market source.

The notes were seen trading a week ago at 228 bps offered.

HSBC sold $3 billion of the notes (A1/A/AA-) on March 1 at a spread of Treasuries plus 250 bps.

The banking and financial services group is based in London.

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