High-grade primary market quiet; thin December supply eyed; Moody’s firms; RBS eases

By Cristal Cody

Tupelo, Miss., Dec. 6 – Investment-grade primary action remained quiet over Thursday’s session following the financial market closures for the funeral of former U.S. president George H.W. Bush.

Deal volume week to date totals just over $4 billion, all from Monday with no reported issuance on Tuesday.

For the week ended Dec. 6, Lipper US Fund Flows reported outflows of $1.27 billion for corporate investment-grade funds, down from outflows of $1.69 billion in the previous week. The week marked a second straight week of outflows.

The Markit CDX North American Investment Grade 31 index closed the day about 3 basis points wider at a spread of 81 bps.

Treasury yields slipped and stocks were mostly weaker but improved from early morning when the Dow Jones industrial average fell nearly 600 points. The Dow closed off 79.4 points.

Issuance was expected by market sources to hit $15 billion to $20 billion for the week before the national day of mourning was set for Wednesday. Supply for the month also was forecasted to dwindle as the year closes with only about $25 billion to $30 billion of high-grade issuance initially predicted for December, according to syndicate sources.

Now, zero to about $5 billion is expected in the week ahead as credit spreads remain weak, sources said.

Bonds priced this week were mixed in secondary trading, a market source said.

Moody's Corp.’s $800 million of senior notes (BBB+/BBB+) that priced in two parts on Monday traded about 1 bp to 3 bps better than issuance.

Bank and financial paper was flat to wider on the day, a source said.

Royal Bank of Scotland Group plc’s $1.75 billion of 5.076% fixed-to-floating rate senior notes due Jan. 27, 2030 softened 10 bps during the session. The notes are trading nearly 90 bps wider than where the issue priced in late September.

In other secondary trading, Home Depot Inc.’s senior notes (A2/A) were mostly unchanged.

Comcast Corp.’s senior notes (A3/A-/A-) that priced as part of a $27 billion 12-tranche offering in October have been among the mostly actively traded investment-grade issues since early November, according to Trace data. The company’s 4.7% notes due Oct. 15, 2048 softened about 1 bp on Thursday.

Moody's improves

Moody's 4.25% notes due Feb. 1, 2029 tightened to 132 bps bid in secondary trading, a source said.

The notes priced in a $400 million tranche on Monday at a spread of 135 bps over Treasuries.

Moody’s 4.875% notes due Dec. 17, 2048, which priced in a $400 million tranche on Monday at a Treasuries plus 170 bps spread, firmed to 169 bps bid, 166 bps offered.

New York-based Moody’s is the parent company of credit ratings agency Moody’s Investors Service.

RBS softens

Royal Bank of Scotland Group’s 5.076% fixed-to-floating rate senior notes due Jan. 27, 2030 eased 10 bps on Thursday to 286 bps bid, a source said.

The bank sold $1.75 billion of the notes (Baa2/BBB-/BBB+) on Sept. 24 at par to yield a Treasuries plus 200 bps spread.

The coupon will convert to a floating rate of Libor plus 190.5 bps on the Jan. 27, 2029 optional redemption date.

Royal Bank of Scotland Group is a banking and financial services company based in Edinburgh, Scotland.

Home Depot steady

Home Depot’s 3.9% senior notes due 2028 (A2/A) were flat during the session at 83 bps bid, according to a market source.

The notes were sold in a $1 billion tranche on Nov. 27 at a spread of Treasuries plus 93 bps.

Home Depot is an Atlanta-based home improvement retailer.

Comcast eases

Comcast’s 4.7% notes due Oct. 15, 2048 eased about 1 bp to 158 bps bid in secondary trading on Thursday, according to a market source.

Comcast sold $4 billion of the 30-year bonds on Oct. 12 at a spread of 150 bps over Treasuries.

The media and technology company is based in Philadelphia.

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