Morning Commentary: High-grade primary quiets; secondary supply picks up; SEB mixed

By Cristal Cody

Tupelo, Miss., Aug. 28 – Investment-grade market activity was quiet with no reported issuers offering bonds at the start of Friday’s session, sources report.

Deal volume quieted on Thursday at the start of the Federal Reserve Bank of Kansas City’s two-day virtual economic policy symposium.

High-grade corporate supply totals about $17 billion week to date, in line with the $15 billion to $20 billion of volume expected.

Sovereign, supranational and agency issuers also priced $10 billion of bonds this week.

Market tone in the high-grade space was fairly positive over the morning.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 0.23% to 134.90.

The Pimco Investment Grade Corporate Bond index improved 0.49% to 115.18.

In the secondary market, new issues are trading mostly tighter but leaked wider by late in the week, a source said.

Skandinaviska Enskilda Banken AB’s $2 billion of senior notes (Aa2/A+/AA-) that priced in three tranches on Tuesday were wrapped around issuance to about 1 basis point better.

The company’s $600 million of 0.85% notes due Sept. 2, 2025 were unchanged from issuance.

The notes priced at a 58 bps over Treasuries spread, tighter than talk in the 80 bps over Treasuries area.

While primary action slowed on Thursday, the secondary market ramped up supply to $19.73 billion, the strongest over the week, according to Trace data.

High-grade secondary market volume totaled $17.45 billion on Wednesday, $18.56 billion on Tuesday and $15.82 billion on Monday.

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