Morning Commentary: Investment-grade bond supply quiets; focus turns to Fed decision

By Cristal Cody

Tupelo, Miss., July 31 – The high-grade bond market stayed quiet at the start of Wednesday’s session with no primary action expected over the session as the focus turns to whether the Federal Reserve will cut rates for the first time since 2008.

Market sources are predicting a rate cut of 25 basis points.

High-grade volume week to date totals more than $18 billion, compared to about $20 billion to $25 billion of supply expected by syndicate sources for the week.

Issuance was predicted by market sources to be front-loaded ahead of the outcome of the Federal Reserve’s monetary policy meeting on Wednesday.

Deal volume this week has been led by Boeing Co.’s $5.5 billion six-tranche offering of senior notes and Las Vegas Sands Corp.’s $3.5 billion three-part offering of senior notes on Monday.

In the secondary market, new issues priced this week are trading mostly better than issuance, a source said.

Boeing’s senior notes (A2/A) mostly traded about 1 bp to 2 bps tighter.

The company’s $750 million of 2.95% notes due Feb. 1, 2030 firmed 1 bp. The notes priced at a spread of 90 bps over Treasuries.

Huntington Bancshares Inc.’s 2.625% senior notes due Aug. 6, 2024 (Baa1/BBB+/A-) that priced in the previous session firmed 2 bps in the secondary market.

The bank holding company sold $800 million of the five-year notes on Tuesday at a spread of 83 bps over Treasuries.

Overall high-grade corporate secondary market volume declined to $18.99 billion on Tuesday from $19.11 billion on Monday, according to Trace data.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.