Midday Commentary: Investment-grade bonds open tighter; new issues firm in trade

By Cristal Cody

Tupelo, Miss., Oct. 29 - Investment-grade bond spreads opened 1 basis point to 2 bps tighter overall on Tuesday, while new paper priced in the previous session firmed in early secondary trading, according to market sources.

Altria Group Inc.'s two-part offering (Baa1/BBB/BBB+) traded 10 bps to 20 bps tighter in the secondary market over the morning, a trader said.

"Both are performing well," the trader said.

The Markit CDX North American Investment Grade series 21 index ended Monday flat at a spread of 72 bps but near the tightest levels of the cycle, according to market sources.

Altria tightens

Altria Group's 4% senior notes due 2024, which priced in a $1.4 billion offering at Treasuries plus 155 bps, tightened to 144 bps bid, 143 bps offered Tuesday morning, a trader said.

The tranche of 5.375% notes due 2044 came in to 156 bps bid, 155 bps offered. Altria sold $1.8 billion of the notes with a spread of Treasuries plus 175 bps.

The Richmond, Va.-based company is the parent of Philip Morris USA Inc., a cigarette and smokeless tobacco product maker.

Flowserve better

Flowserve Corp.'s 4% senior notes due 2023 (Baa2/BBB-/BBB) that were sold on Monday firmed to 153 bps bid, 152 bps offered early Tuesday, a trader said.

The company sold $300 million of the notes on Monday with a spread of Treasuries plus 155 bps.

The flow control systems manufacturer is based in Irving, Texas.

Colgate-Palmolive firms

Colgate-Palmolive Co.'s new 1.5% five-year notes traded better at 32 bps bid, 30 bps offered, a trader said on Tuesday.

Colgate-Palmolive (Aa3/AA-/) priced $300 million of the notes on Monday at a spread of Treasuries plus 35 bps.

The consumer products company is based in New York City.

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