High-grade action slows as SEC closes, holiday nears; January supply eyed; trading thin

By Cristal Cody

Tupelo, Miss., Dec. 24 – Christmas cheer was in short supply on the eve of the holiday with the U.S. Securities and Exchange Commission, among other government entities, closed.

No SEC-registered filings have been filed since Friday.

Little activity was expected in the high-grade bond markets with most desks thinly staffed for the remainder of the year, sources report.

The bond markets closed at 2 p.m. ET on Monday and will remain closed on Tuesday for the Christmas Day holiday.

December deal volume is set to post the weakest supply totals since the 2007-2008 financial crisis, according to market sources.

Nearly $9 billion of high-grade corporate bonds have priced month to date.

As previously reported, the Dow Jones industrial average and S&P 500 are set to post their worst December performance since the Great Depression of 1931, according to a market source.

The high-yield bond market has gone the entire month of December without a deal for the first time since November 2008, the source said.

Looking ahead to January, market sources predict a busy high-grade calendar, depending on volatility.

About $100 billion to $120 billion of bond volume is expected by syndicate sources for January.

Secondary trading light

Meanwhile, very little activity was seen in the secondary market over the short session on Monday.

Comcast Corp.’s senior notes (A3/A-/A-) that priced as part of a $27 billion 12-tranche offering continue to be among the most active investment-grade issues in the secondary market, but even those issues had few trades on Monday, according to market sources and Trace data.

The company’s 4.7% notes due Oct. 15, 2048 headed out improved to 101.87 from 101.45 over the morning and 101.63 on Friday.

Comcast, a media and technology company based in Philadelphia, sold $4 billion of the 30-year bonds on Oct. 12 at 99.918 to yield 4.705%, or a spread of 150 basis points over Treasuries.

General Motors Co.’s $2.1 billion of senior notes (Baa3/BBB/BBB) that priced in three tranches in September also have been among the most active high-grade issues in the secondary market in December, according to Trace.

On Monday, the company’s 5% notes due Oct. 1, 2028 traded mostly unchanged to slightly weaker from Friday at 94.54.

The Detroit-based automaker sold $750 million of the notes on Sept. 5 at 99.965 to yield 5.004%, or a spread of 210 bps over Treasuries.

On Friday, $11.3 billion of investment-grade bonds were traded, according to Trace.

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