High-grade deal volume quiet; credit spreads widen; Home Depot stronger; JPMorgan, Citi weak

By Cristal Cody

Tupelo, Miss., Feb. 5 – The high-grade primary market stayed quiet on Friday, bringing the week’s total deal volume to about $17 billion.

Traders focused early in the day on economic data, including the Labor Department’s January jobs report.

The Labor Department said January employment rose by 151,000, less than the 190,000 forecast. The unemployment rate fell to 4.9% from 5% in December. The rate came in better than the 5% market analysts expected and is the lowest level since February 2008.

The volatile market conditions make it hard to forecast volume in the week ahead, according to informed sources.

“Crazy markets these days, but [there] seems to be a big backlog in the pipeline,” one source said. “If we get a few stable days, should be decent issuance.”

Credit spreads widened further on Friday. The Markit CDX North American Investment Grade index eased 6 basis points to close at a spread of 115 bps.

In the secondary market, Home Depot Inc.’s 3% senior notes due 2026 that priced on Wednesday remained tight as the session closed.

Bank and financial spreads are 30 bps wider on the year, according to a Barclays report on Friday.

“Going into the year, banks were viewed as a safe haven amid concerns about slower global growth; in that context, it is somewhat surprising that bank debt has come under so much pressure,” Barclays analysts said in the note. “Year-to-date, bank spreads have widened more than industrials excluding commodity credits.”

Subordinated notes that JPMorgan Chase & Co. and Citigroup Inc. priced in late 2015 are trading more than 30 bps wider than issuance.

Home Depot tightens

Home Depot’s 3% notes due 2026 traded mid-morning on Friday at 102 bps offered, a trader said late afternoon.

The company sold $1.3 billion of the notes (A2/A/A) at Treasuries plus 120 bps on Wednesday as part of a $3 billion three-part bond offering.

Home Depot is an Atlanta-based home improvement retailer.

JPMorgan unchanged

JPMorgan Chase’s 4.25% subordinated bonds due 2027 were flat in secondary trading at 252 bps bid, a market source said.

JPMorgan Chase sold $2 billion of the bonds (Baa1/A-/A) on Sept. 23 at a spread of Treasuries plus 215 bps.

The financial services company is based in New York City.

Citi eases

Citigroup’s 4.45% subordinated notes due 2027 eased 2 bps on Friday to 286 bps bid, according to a market source.

Citigroup sold $1.5 billion of the notes (Baa3/ BBB+/A-) in an Oct. 23 reopening at 233 bps plus Treasuries. The $2 billion tranche originally priced on Sept. 23 at a spread of 235 bps over Treasuries.

The financial services company is based in New York.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.