Midday Commentary: Investment-grade bonds open slightly wider; Hewlett-Packard notes ease

By Cristal Cody

Tupelo, Miss., Jan. 13 - Investment-grade bonds opened slightly wider on Monday, according to market sources.

Levels, though, are still tighter than before the Labor Department's December job report was released on Friday, according to RBC Capital Markets, LLC.

"The spread between investment grade and high yield bonds sits near a cycle tight," RBC analysts said in a note on Monday. "This could spur a fresh wave of M&A/LBO activity ... as potential acquirers should be able to secure financing [for] even riskier transactions."

The Markit CDX North American Investment Grade series 21 index firmed 1 basis point to a spread of 64 bps on Friday.

New issues traded moderately weaker in the morning session, sources said.

Hewlett-Packard eases

Hewlett-Packard Co.'s 2.75% notes due 2019 widened about 5 bps on the offered side from Friday.

Hewlett-Packard's 2.75% notes due 2019 notes (Baa1/BBB+/A-) traded wider at 100 bps offered early Monday, compared to 95 bps offered on Friday, according to market sources.

Hewlett-Packard sold $1.25 billion of the notes on Thursday with a spread of Treasuries plus 102 bps.

The computer and technology company is based in Palo Alto, Calif.

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