Morning Commentary: High-grade bonds mixed; Mylan, Wells Fargo soften; credit spreads improve

By Cristal Cody

Eureka Springs, Ark., June 15 – Investment-grade bonds were mixed but mostly on the softer side in the secondary market over the morning on Wednesday.

The Federal Reserve wraps its two-day policy meeting later in the day. Market participants do not expect any rate changes and predict a low chance of a rate hike in July.

Mylan NV’s 3.95% senior notes due 2026 were quoted 3 basis points weaker in secondary trading and wider than where the notes priced at the end of May.

Wells Fargo & Co.’s 4.4% subordinated notes due 2046 eased 6 bps and also traded weaker than where the bonds priced earlier in the month.

The Markit CDX North American Investment Grade index opened the session about 1 bp tighter at a spread of 83 bps.

The three-month Libor yield was down 1 bp at 65 bps.

Secondary trading volume rose to $13.94 billion on Tuesday from $10.5 billion of high-grade issues traded on Monday, according to Trace.

Mylan eases

Mylan’s 3.95% notes due 2026 eased 3 bps to 243 bps offered, according to a market source.

Mylan sold $2.25 billion of the notes (Baa3/BBB-/BBB-) on May 31 at Treasuries plus 220 bps.

The pharmaceutical company is based in Hatfield, Hertfordshire, England.

Wells Fargo eases

Wells Fargo’s 4.4% notes due 2046 were out 6 bps at 204 bps offered in the secondary market, according to a market source.

Wells Fargo sold $2 billion of the notes on June 7 at a spread of 188 bps over Treasuries.

The financial services company is based in San Francisco.

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