Coming week seen busier; primary watching Greece austerity measure; Wal-Mart, Goldman wider

By Andrea Heisinger and Cristal Cody

New York, June 24 - The high-grade bond market ended the low-volume week with a thud, according to market sources. No new deals were priced.

Nothing was expected after Thursday ended with an uneasy tone due to Greece and domestic economic woes.

Issuance volume for the coming week is "going to be light," according to one syndicate source.

"It's a holiday week," he said. "I don't know how much we'll have Monday, and there's some stuff on Greece middle of the week."

Most issuance is expected to take place on Tuesday through Thursday, dependent on how the primary feels at the open, he added.

Another source said that with the down tone the market has seen it's "not expected to be crazy busy" in the coming week.

"I think we're seeing a couple of trades, maybe $10 [billion] to $12 billion overall," the source said. "We had good news on Greece the back end of the week."

The Greek government has to vote on austerity measures on the coming Tuesday, so that could have an effect on the credit markets.

Bond spreads were slightly weaker to mostly unchanged on Friday.

The Markit CDX Series 15 North American Investment Grade index eased 2 basis points to a spread of 101 bps, according to Markit Group Ltd.

"Yesterday was very busy, but today seemed to be on the quiet side," a trader said. "Yesterday, we were active in mortgage bonds, corporates and agencies - it was a surprise because yields shot up like they did. We had all kinds of buyers coming in yesterday but not so much today."

Overall trading volume dropped to about $8 billion.

"Looking pretty dull right now," a trader said.

Wal-Mart Stores Inc.'s bonds widened in secondary trading over the week, though on no apparent news other than Fitch Ratings' downgrade of Target Corp., according to traders.

Goldman Sachs Group Inc.'s 3.625% notes due 2016 were seen ending the week wider.

Also in secondary trading, Hydro-Quebec's notes firmed on the offer side.

Treasuries rallied on the short end of the curve on a safer haven bid ahead of the weekend and a vote on Greece's bailout program. The 10-year benchmark note yield fell to 2.86% from 2.91%. The 30-year bond yield rose 2 bps to 4.19%.

Wal-Mart bonds widen

Wal-Mart's 5.625% bonds due April 15, 2041 were offered at 101 bps on Wednesday, and they were "offered today at 105, so a little wider on those," a trader said Friday.

The bonds are firmer since issuance, though. The Bentonville, Ark.-based retailer priced the bonds on April 11 at Treasuries plus 110 bps.

Wal-Mart's 4.875% bonds due July 8, 2040 were mostly unchanged. The bonds were sold on March 24, 2010 at Treasuries plus 95 bps.

"They traded a day or two ago at 102, and they're 102 today, so not much change in them," the trader said.

Goldman Sachs weaker

New York-based Goldman Sachs' 3.625% notes due 2016 traded on Friday at 183 bps offered.

The notes were quoted on Thursday at 191 bps bid, 185 bps offered. In trading on Wednesday, the notes were seen at 180 bps bid, 175 bps offered.

Hydro-Quebec firms

In other trading, Hydro-Quebec's notes were active early in the day, according to a trader.

The company sold $1 billion of 2% global five-year notes (Aa2/A+) at a spread of Treasuries plus 55.65 bps on Thursday.

The notes were seen offered today at 53 bps, the trader said.

The government-owned generator and distributor of electric power is based in Montreal.

© 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.