Morning Commentary: Investment-grade primary market action quiets on holiday eve

By Cristal Cody

Tupelo, Miss., Nov. 25 – The investment-grade bond market stayed quiet at the open on the eve of Thanksgiving Day with no reported corporate or sovereign, supranational and agency issuers.

Wednesday is the last full session of the week with the bond markets set to close on Thursday and close early at 2 p.m. ET on Friday.

Deal volume has been thin week to date with just one reported corporate deal priced on Monday and three SSA issuers in the primary market on Tuesday.

Only up to about $5 billion of supply was expected this week by market participants.

Steady supply is forecast when December kicks off with about $25 billion to $35 billion or more of deal volume anticipated over the final month of the year, according to syndicate sources.

Meanwhile, secondary supply has been heavier so far this week with $23.62 billion of high-grade corporate bonds traded on Tuesday, up from $21.06 billion on Monday, according to Trace.

Verizon Communications Inc.’s $12 billion of senior notes (Baa1/BBB+/A-) that priced in five tranches earlier in November remain among the most active issues in the secondary market, a source said.

The company’s 2.875% notes due Nov. 20, 2050 were quoted at 103.83 early Wednesday.

Verizon sold $2.75 billion of the notes on Nov. 10 at 99.74 to yield 2.89%.

At the start of the day, market tone was mixed but on the upswing in the high-grade space.

The Pimco Investment Grade Corporate Bond index improved 0.36% to $116.79.

The iShares iBoxx Investment Grade Corporate Bond ETF gained 0.07% to $137.52.

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