Muted primary closes $51 billion week; JPMorgan stable; Bank of America, Morgan Stanley soft

By Aleesia Forni and Cristal Cody

Virginia Beach, March 13 – The high-grade primary market took a breather on Friday, with no new deals pricing during the session.

Roughly $51.47 billion of new investment-grade paper sold during another frenzied week for the market.

This figure pushes the total supply for the month of March to a staggering $115 billion in only 10 trading days.

The preferred market did see some activity on Friday, with Citigroup Inc. launching an offering of $1,000-par series O fixed-to-floating-rate noncumulative preferreds on Friday.

Sources are predicting the week ahead to be less active amidst the Federal Reserve’s two-day policy meeting mid-week.

“Things should calm down a bit next week,” one market source said. “We’re thinking around $25 [billion] to $30 [billion].”

Meanwhile, Lipper reported the lowest inflows of the year into corporate high-grade bond funds for the week ended March 11, which saw inflows of $571 million.

The total was down from last week’s inflows of $1.638 billion, bringing the year-to-date total inflows to $21.693 billion.

Bonds were mostly flat to wider on the day ahead of the weekend following the strong supply brought over the week, sources said.

The Markit CDX North American Investment Grade series 23 index widened 2 basis points to a spread of 66 bps.

JPMorgan Chase & Co.’s 3.125% notes due 2025 traded flat over the session.

Goldman Sachs Group Inc.’s 3.5% senior notes due 2025 eased 1 bp.

Bank of America Corp.’s 4% notes due 2025 widened 5 bps with the company’s paper softer overall following the results of the Federal Reserve’s stress tests earlier in the week. Bank of America must resubmit its capital plan to the Fed by the end of September.

In other secondary trading, Citigroup’s 3.75% notes due 2024 were flat.

Morgan Stanley & Co. Inc.’s 3.875% notes due 2024 widened 6 bps during the session.

Microsoft Corp.’s 2.7% notes due 2025 eased 1 bp.

Citi preferreds

Citigroup Inc. priced $1.5 billion of 5.875% $1,000-par series O fixed-to-floating rate noncumulative preferred stock on Friday, a market source reported.

The preferreds will be issued as depositary shares representing a 1/25th interest.

Citigroup Global Markets Inc. is the bookrunner.

Dividends will be fixed and payable on a semiannual basis until March 27, 2020, at which time the rate will float at Libor plus 405.9 bps and will be payable quarterly. Beginning on the reset date, the bank has the option to redeem the preferreds at par plus accrued dividends.

The company can also redeem the issue within 90 days of a regulatory capital treatment event.

The new securities will not be listed on any exchange.

The proceeds will be used for general corporate purposes, which may include funding operating units and subsidiaries, financing potential acquisitions or expansions and refinancing outstanding debt obligations.

Citigroup is based in New York.

TD Bank eyes floaters

Toronto-Dominion Bank is planning to price an offering of floating-rate senior medium-term notes, series A, according to a supplement filed with the Securities and Exchange Commission.

TD Securities is the bookrunners.

Proceeds will be added to the company’s general funds and be used for general corporate purposes.

The financial services and banking company is based in Toronto.

JPMorgan stable

JPMorgan Chase’s 3.125% notes due 2025 headed out into the weekend unchanged at 125 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Goldman eases

Goldman Sachs’ 3.5% notes due 2025 eased 1 bp to 144 bps bid on Friday, a source said.

Goldman sold $1.7 billion of the notes (Baa1/A-/A) on Jan. 20 at a spread of Treasuries plus 170 bps.

The financial services company is based in New York City.

Bank of America widens

Bank of America’s 4% notes due 2025 widened 5 bps to 196 bps bid in trading on Friday, a source said.

The company sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

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

Citigroup unchanged

Citigroup’s 3.75% notes due 2024 traded flat at 131 bps bid, according to a market source.

The bank sold $1.25 billion of the notes (Baa2/A-/A) on June 9, 2014 at Treasuries plus 115 bps.

Citigroup is based in New York City.

Morgan Stanley weak

Morgan Stanley’s 3.875% notes due 2024 eased 6 bps to 140 bps bid, a market source said.

Morgan Stanley sold $3 billion of the notes (Baa2/A-/A-) on April 23, 2014 at 130 bps over Treasuries.

The financial services company is based in New York City.

Microsoft soft

Microsoft’s 2.7% notes due 2025 eased 1 bp to 71 bps bid in the secondary market, a source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at Treasuries plus 75 bps.

The computer software company is based in Redmond, Wash.

Bank/broker CDSs flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher on Friday, according to a market source.

Bank of America’s CDS costs were 1 bp higher at 65 bps bid, 70 bps offered. Citigroup’s CDS costs were flat 72 bps bid, 77 bps offered. JPMorgan Chase’s CDS costs were unchanged at 62 bps bid, 67 bps offered. Wells Fargo & Co.’s CDS costs were also unchanged at 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs were 1 bp higher at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs remained flat at 73 bps bid, 78 bps offered. Goldman Sachs Group’s CDS were unchanged at 82 bps bid, 85 bps offered.

Paul Deckelman and Stephanie N. Rotondo contributed to this review.

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