Jobs report sends primary tone downward; InBev, John Deere, TD Bank stronger in trading

By Andrea Heisinger and Cristal Cody

New York, July 8 - The primary market was quiet on Friday following an upbeat session the previous day when a backlog of several deals were able to price.

One source said she was glad that so many issuers had jumped into the high-grade market on Thursday when a window opened.

"Otherwise they would have had to wait again," she said.

Thursday's report of a drop in unemployment claims for June had given the market a boost following volatility centered on the sovereign debt crisis in Europe. By Friday that volatility had returned as the non-farm payrolls report for June was released, showing a dismal number of jobs were added.

The coming week is expected to have a fair amount of new issues - possibly on par with the past week.

"It should be a good one next week," a syndicate source said.

"It's hard to tell how it will be [on Monday] but we're hearing away of quite a few things."

In the secondary, overall trading volume dropped 40% to less than $10 billion on Friday.

"Trading is quiet today," one trader said, adding that the "market is shocked by the jobs report."

Anheuser-Busch InBev Worldwide Inc.'s fixed-rate notes sold the previous day tightened 7 basis points in the secondary market, a trader said.

John Deere Capital Corp.'s new fixed-rate notes also firmed in trading.

Toronto-Dominion Bank's notes firmed 1 bp to 3 bps in trading on Friday, traders said.

Bank of America Corp.'s fixed-rate notes firmed 1 bp on the day in light trading.

The Markit CDX Series 15 North American investment-grade index eased 1 basis point to a spread of 92 bps on Friday, according to Markit Group Ltd.

Treasuries rose on a weak job report on Friday, sending yields down across the curve. The 10-year note yield fell to 3.02% from 3.14%. The 30-year bond yield dropped to 4.28% from 4.37%.

TD Bank firmer

The new senior medium-term notes (Aaa/AA-) that Toronto-Dominion Bank sold in a $2.5 billion three-tranche offering on Thursday firmed in secondary trading, sources said Friday.

A tranche of 1.375% three-year notes priced a spread of Treasuries plus 65 bps. They traded Friday at 62 bps bid, 58 bps offered, a trader said.

Another trader saw the notes 1 bp tighter than that at 61 bps bid, 58 bps offered.

TD Bank's 2.5% notes due 2016 were seen at 84 bps bid, 81 bps offered and tighter going out on the day at 82 bps bid, 78 bps offered, the traders said. The tranche of five-year notes priced at Treasuries plus 85 bps.

The bank and financial services company is based in Toronto.

InBev stronger

Anheuser-Busch InBev Worldwide sold $1.05 billion of notes (Baa1/A-) in fixed- and floating-rate notes on Thursday.

A $750 million tranche of 1.5% three-year notes sold at a spread of Treasuries plus 70 bps. In the secondary market on Friday, the notes due 2014 tightened to 63 bps bid, 61 bps offered, a trader said.

The brewer is based in Leuven, Belgium.

John Deere 4 bps tighter

John Deere Capital Corp.'s new fixed-rate notes firmed 4 bps on the bid side, traders said.

The company sold $650 million of notes (A2/A) in fixed- and floating-rate notes on Thursday.

The $500 million offering 3.9% 10-year notes priced at a spread of Treasuries plus 77 bps. The notes due 2021 were quoted at 73 bps bid, 70 bps offered, according to traders.

The financing arm of heavy equipment maker Deere & Co. is based in Reno, Nev.

Bank of America near issue

Bank of America also came with fixed- and floating-rate notes in a $2.5 billion offering (A2/A/A-) on Thursday.

In the secondary market on Friday, the $2 billion tranche of 3.75% notes due 2016 traded 1 bp tighter at 204 bps bid, 201 bps offered, a trader said. The five-year notes priced at a spread of Treasuries plus 205 bps.

The bank and financial services company is based in Charlotte, N.C.

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