Morning Commentary: High-grade primary market quiet; secondary volume jumps; Kroger active

By Cristal Cody

Tupelo, Miss., Dec. 1 – The investment-grade bond market opened with little activity on Friday.

No reported issuers were marketing bonds for the first session of December.

Deal action has been strong over the week, with volume heaviest in the first three sessions.

High-grade secondary market volume soared to $23.61 billion on Thursday from $17.24 billion on Wednesday, according to Trace.

Kroger Co.’s senior notes (Baa1/BBB/BBB) traded heavily on Thursday and remained active early Friday after the company reported better-than-expected third-quarter earnings the previous day, a market source said.

The Cincinnati-based grocery retailer also announced it has received a high amount of purchase interest in its chain of convenience stores.

The retail grocery business has been impacted since Amazon.com, Inc. completed its $13.7 billion acquisition of Whole Foods Markets Inc. in August.

Kroger’s 3.7% notes due Aug. 1, 2027 were better over the morning at 100.46 from 100.03 on Thursday in the secondary market. On Wednesday, the notes were last seen in the secondary market 100.04.

The company sold $600 million of the notes on July 17 at 99.941 to yield 3.707% and a Treasuries plus 140 basis points spread.

Kroger’s 4.65% notes due Jan. 15, 2048 traded up to 100.32 from where the notes went out on Thursday at 99.50. The bonds last traded on Wednesday at 98.66.

Kroger sold $500 million of the 30-year notes in the July 17 offering at 99.276 to yield 4.695%, or a spread of 180 bps over Treasuries.

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