Morning Commentary: High-grade credit spreads open tighter; HSBC paper firms; Dell mixed

By Cristal Cody

Eureka Springs, Ark., June 20 – Investment-grade bonds traded mostly tighter early Monday with several issuers expected to tap the primary market over the day.

With “the odds of a Brexit decline, we should see a modest rally in credit this week,” RBC Capital Markets, LLC analysts said in a note on Monday. “Spreads are tighter this morning with equity futures pointing to a strong open.”

The Markit CDX North American Investment Grade index opened 4 basis points tighter at a spread of 79 bps.

The three-month Libor yield was down 2 bps from Friday morning at 64 bps.

HSBC Holdings plc’s 3.9% subordinated notes due 2026 traded about 5 bps better in the secondary market.

Dell, Inc.’s senior secured notes (Baa3/BBB-/BBB-) were mixed in early secondary trading.

HSBC tightens

HSBC’s 3.9% notes due 2026 were quoted about 5 bps tighter at 214 bps offered, according to a market source.

The company sold $2.5 billion of the notes (A1/A/AA-) on May 18 at Treasuries plus 210 bps.

London-based HSBC is a banking and financial services group.

Dell mixed

Dell’s 4.42% notes due 2021 traded flat to 1 bp softer at 277 bps offered, according to a market source.

Dell sold $4.5 billion of the notes on May 17 at Treasuries plus 312.5 bps.

The technology and services company is based in Round Rock, Texas.

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