Morning Commentary: Investment-grade bonds mixed; Lloyds eases; credit spreads tighten

By Cristal Cody

Eureka Springs, Ark., March 21 – Investment-grade bonds were mixed in secondary trading early Monday as market participants geared up for new supply over the day from issuers including FedEx Corp.

Lloyds Banking Group plc’s 4.65% subordinated tier 2 debt securities that priced late in the previous week traded 1 basis point softer on Monday.

The Markit CDX North American Investment Grade index opened 5 bps tighter at a spread of 80 bps.

The three-month Libor yield fell 2 bps at 62 bps early Monday.

High-grade secondary trading volume totaled $14.14 billion on Friday, down from $17.76 billion on Thursday, according to Trace.

Lloyds eases

Lloyds Banking’s 4.65% notes due March 24, 2026 traded 1 bp softer early Monday at 272 bps offered, a market source said.

Lloyds sold $1.5 billion of the subordinated tier 2 debt securities (Baa2/BBB-/A-) on Thursday at a spread of Treasuries plus 278 bps.

The retail bank is based in London.

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