Primary empty on ECB meeting, coming jobs numbers; Allstate notes tighten in secondary

By Aleesia Forni and Andrea Heisinger

New York, June 6 - New issues were stagnant for the second day in a row in the investment-grade bond market ahead of the release of unemployment numbers.

Payroll data for May will be released early on Friday, meaning the week is likely done as far as new issues, sources said.

"No one's getting anything done [yet] this week," a source said.

There was a meeting of the European Central Bank on Thursday, with no changes made to interest rates. The bank also made no moves to increase the amount of money that could be lent to businesses in the euro zone. Leaders did say that they discussed measures to stimulate the euro zone's economy.

A market source said that it was "a whole combination of things" that led to an empty primary.

"It's just a crappy market today," the source said, adding that equities that struggled made an upward move later in the day.

Roughly $15 billion of corporate bonds have been sold in the high-grade market already this week, hitting the low end of the expected range of $15 billion to $20 billion of supply.

In the preferred stock market, Allstate Corp.'s new $250 million of 5.625% series A noncumulative perpetual preferreds freed up early in the session after pricing on Wednesday.

A trader said the market for paper was $24.76 to $24.93.

After the bell, a source said the issue "opened up weak" and eventually ended "improved by yesterday's standards, but [was] still not good."

He pegged the paper at $24.80 bid, $24.85 offered.

The Markit CDX Series 20 North American Investment Grade index was 2 basis points tighter on the day at a spread of 84 bps.

In secondary market action, Allstate's recent notes were quoted tighter in trading compared to levels seen earlier during the session.

Investment-grade bank and brokerage credit default swap costs declined on Thursday, according to a market source.

Bank of America Corp.'s CDS costs were 2 bps tighter at 104 bps bid, 109 bps offered. Citigroup Inc.'s CDS costs were 2 bps tighter at 94 bps bid, 99 bps offered. JPMorgan Chase & Co.'s CDS costs declined 2 bps to 81 bps bid, 85 bps offered. Wells Fargo & Co.'s CDS costs also tightened 2 bps to 64 bps bid, 68 bps offered.

Merrill Lynch's CDS costs declined 2 bps to 87 bps bid, 94 bps offered. Morgan Stanley's CDS costs declined 1 bp to 132 bps bid, 137 bps offered. Goldman Sachs Group, Inc.'s CDS costs were 3 bps tighter at 118 bps bid, 123 bps offered.

Toyota ups floater size

Toyota Motor Credit Corp. increased the size of its one-year floating-rate medium-term notes, series B, to $500 million, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aa3/AA-) had an original size of $350 million on Wednesday, but the size was increased the same day. Pricing was at par to yield Libor minus 1 bp.

Agents were BofA Merrill Lynch and RBC Capital Markets LLC.

The funding arm of Toyota is based in Torrance, Calif.

Allstate notes tighten

Though there was a lack of activity in the high-grade secondary market, Allstate's new two-part issue of notes traded tighter on the day, one trader said.

The $500 million tranche of 3.15% 10-year notes traded 4 bps better compared to levels seen earlier during the session at 99 bps bid, 95 bps offered.

The notes priced at a spread of Treasuries plus 102 bps on Tuesday.

Meanwhile, the $500 million tranche of 4.5% 30-year bonds was quoted 2 bps tighter at 122 bps bid, 118 bps offered.

The bonds were sold at Treasuries plus 122 bps.

The holding company for insurance subsidiaries is based in Northbrook, Ill.

Stephanie N. Rotondo contributed to this review.

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