High-grade supply quiets as pandemic fears rattle markets; spreads widen; Cigna bonds gain

By Cristal Cody

Tupelo, Miss., March 6 – The investment-grade primary market stayed quiet on Friday as volatility in the financial markets continued.

Credit spreads widened more than 7 basis points after easing about 10 bps in the previous session.

The Markit CDX North American Investment Grade 33 index closed Friday at a spread of 82.75 bps.

Stocks were modestly weaker in afternoon trading, while Treasuries rallied further over the session.

The benchmark 10-year note yield declined 22 bps to 0.706% on the day after trading down 18 bps at the start of the session.

U.S. investment-grade corporate spreads moved wider this week by more than 30 bps to 128 bps, the widest since June 2019, according to a Wells Fargo Securities, LLC research note on Friday.

High-grade issuance was stronger than expected this week with more than $27 billion of bonds priced in three sessions, including more than $18 billion of bonds sold just on Wednesday.

Up to about $15 billion of bond supply was forecast for the week as coronavirus pandemic fears hamper the markets.

New issues stronger

In the secondary market, Cigna Corp.’s senior notes (Baa2/A-/BBB) priced in a $3.5 billion three-part offering on Wednesday improved over the day, a source said.

The company’s 3.4% notes due March 15, 2050 headed out at 105.95 from 103.53 early Friday and 101.84 on Thursday.

The Bloomfield, Conn.-based health service company sold $1.25 billion of the 30-year notes at 99.813 to yield 3.41% and with a Treasuries plus 177 bps spread.

Truist Bank’s new $1.25 billion of 2.25% senior notes due March 11, 2030 (A2/A/A+) also were active in light secondary trading on Friday, a source said.

The notes were quoted at 100.162 over the day, down from 101.07 early in the session but better than where the issue was seen Wednesday at pricing at 99.84.

Truist sold $1.25 billion of the 10-year notes on Wednesday as part of a $4.25 billion four-tranche offering at a spread of 123 bps over Treasuries.

The Charlotte, N.C.-based bank was created following the merger last year of Branch Banking & Trust Co. and SunTrust Banks, Inc.

Energy bonds widen

Bonds in the energy sector remained mostly weak on Friday, a market source said.

Energy Transfer Operating LP 3.75% notes due May 15, 2030 (Baa3/BBB-/BBB-) softened over the session with the notes quoted down to 101.31 from 104.02 and more than 55 bps wider at an interpolated spread of 293 bps.

The Dallas-based natural gas midstream and intrastate transportation and storage company sold $1.5 billion of the bonds on Jan. 7 at 99.843 to yield 3.769% and a Treasuries plus 255 bps spread.

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