High-grade primary market quiets as market tone improves; Duke Energy notes tighten 7 bps

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 10 - Issuers in the high-grade primary market stayed on the sidelines during Thursday's session despite a positive tone.

"Looked better than yesterday," one market source said on Thursday.

Despite this, the U.S. high-grade bond market was empty, leaving the week's total at roughly $3.3 billion so far.

With a quiet session expected for Friday, the total is expected to come in shy of predictions of a $5 billion to $10 billion week.

"Hopefully some progress is made in Washington, so that should bring more [new issues]," one source said of expectations for deals in the coming weeks.

Investment-grade bonds opened Thursday tighter and continued better over the day in secondary trading, market sources said.

The Markit CDX North American Investment Grade series 21 index firmed 3 basis points to a spread of 80 bps.

In the secondary market, Duke Energy Corp.'s 3.95% notes due 2023 were "another 7 basis points better," a trader said late Thursday afternoon.

The technology, media and telecom sector firmed, with bonds from Verizon Communication Inc., AT&T Inc. and Time Warner Cable Inc. in about 3 bps, another trader said earlier in the day.

Duke Energy tightens

Duke Energy's 3.95% notes due 2023 (Baa1/BBB/BBB+) tightened about 7 bps on the day to 123 bps bid, 120 bps offered, a trader said.

Duke Energy sold $400 million of the notes at a spread of Treasuries plus 135 bps on Tuesday.

The diversified energy company is based in Charlotte, N.C.

Bank/brokerage CDS levels fall

Investment-grade bank and brokerage CDS levels fell on Thursday, according to a market source.

Bank of America Corp.'s CDS costs tightened 4 bps to 105 bps bid, 108 bps offered. Citigroup Inc.'s CDS costs declined 3 bps to 96 bps bid, 99 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 87 bps bid, 91 bps offered. Wells Fargo & Co.'s CDS costs tightened 2 bps to 58 bps bid, 63 bps offered.

Merrill Lynch's CDS costs firmed 3 bps to 105 bps bid, 109 bps offered. Morgan Stanley's CDS costs tightened 3 bps to 133 bps bid, 137 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 3 bps to 126 bps bid, 129 bps offered.

Paul Deckelman contributed to this review

© 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.