High-grade corporate supply quiet on packed week; Freddie Mac prices; credit spreads tighten

By Cristal Cody

Tupelo, Miss., Nov. 3 – The high-grade primary market remained mostly quiet for a second session on Tuesday with all eyes on the U.S. presidential election amid record voter turnout.

Freddie Mac priced $3 billion of three-year Reference Notes.

Corporate issuers stood back again after the primary market opened the week with no reported issuers.

Market participants anticipate anywhere from zero to about $10 billion of investment-grade bond volume this week.

Also distracting from supply this week is the Federal Reserve’s two-day monetary policy meeting that ends on Thursday, and the Labor Department’s release of the October non-farm payroll report on Friday.

Focus also remains on third quarter earnings releases with numerous companies scheduled to post reports over the day, including high-grade bond issuers Sysco Corp., Exelon Corp. and Prudential Financial, Inc.

Market tone was mostly positive over the day.

The iShares iBoxx Investment Grade Corporate Bond ETF gained 0.10% to $134.10.

The PIMCO Investment Grade Corporate Bond index softened 0.09% to $114.14.

Stock indices were up across the board. The Dow Jones industrial average closed the day 2.06% better, while the S&P 500 improved 1.78%.

High-grade credit spreads have tightened more than 5 basis points over the first two days of the week.

The Markit CDX North American Investment Grade 35 index firmed 3.36 bps on Tuesday to a spread of 60 bps.

Freddie Mac prices $3 billion

Freddie Mac priced $3 billion of 0.25% Reference Notes due Oct. 16, 2023 in the offering on Tuesday at 99.91 to yield 0.28%, or a spread of 7 bps over Treasuries, according to a news release.

Barclays, Citigroup Global Markets Inc. and Nomura Securities International Inc. were the bookrunners.

The government-backed mortgage lender is based in McLean, Va.

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