Investment-grade primary expected to slow; Blackstone, Raymond James bonds widen in secondary

By Andrea Heisinger

New York, Aug. 14 - The high-grade primary market died down further on Friday, with no new issues pricing. It was the opposite of the start of the week that saw a torrent of deals.

The coming week could follow the same trend, with issuers jumping in early and offerings dying down later, a syndicate source said.

There remained little activity on the secondary side of the market. Sales from Thursday were trading unchanged or worse than where they priced, a trader said.

Recently priced financial bonds got beat up in trading, with both Blackstone Holdings Finance Co. LLC and Raymond James Financial, Inc. bonds wider than where they priced.

Spreads were wider as Treasury yields came in slightly, a source said. The five-year note was 6 basis points better than the previous day, sitting at a 2.5% yield. The 30-year bond was unchanged at a yield of 4.43%.

Week ahead slower

The coming week will not top the past two in issuance volume, syndicate sources said late Friday.

There will not be days like at the top of the past week where nearly 10 deals priced, a source at a smaller desk said.

"We have a pretty manageable calendar," he said. "Unless someone jumps in to take advantage of attractive funding levels, it shouldn't be too bad. I think some [companies] will jump in to take advantage of that next week."

He said his desk had three to four deals on the horizon.

"We'll see a drop off [after next week] as we get closer to Labor Day," he said.

A source commented on why the past week was so top-heavy as far as deals pricing.

People got in at the top of the week "because of the rates," he said, adding, "now we're seeing things widen out."

New financial bonds worsen

Two new issues priced Thursday by financial names took a turn for the worse by Friday afternoon, a trader outside the sector said.

Bonds from Blackstone Holdings Finance and Raymond James Financial were wider to unchanged from where they priced, he said.

Blackstone's 6.625% due 2019 - the first for the funding unit of the asset management and financial services company - was sold at 312.5 bps over Treasuries. It was quoted at 314 bps bid, 309 bps offered. The levels indicated the bonds gave up some of their initial gains after hitting the secondary market, when the bonds were quoted at 304 bps bid, 299 bps offered.

Raymond James saw its 8.6% bond due 2019 mostly unchanged, although slightly wider at the bid. It was quoted at 502 bps bid, 498 bps offered. It was not freed for trading Thursday after it priced, a source close to the deal said.

Cleveland Electric unchanged

The new bond from Cleveland Electric & Illuminating Co., a subsidiary of FirstEnergy Corp., remained unchanged in the secondary market Friday, a trader said.

The 5.5% notes due 2024 were sold at 195 bps over Treasuries and were quoted at 195 bps bid, 190 bps offered. This was little changed from Thursday's quote of 194 bps bid.

Wells Fargo, Wachovia bonds top trading

Bonds from Wachovia Capital Trust III and Wells Fargo & Co. were trading at high volume by early Friday afternoon, a trader said.

Wells Fargo, which acquired Wachovia Corp., has been mentioned in several news stories lately about bank turnarounds and that it is not planning on rebranding Wachovia branches any time soon.

Wachovia's floaters due 2042 were at the top of trading, while a Wells Fargo 5.625% due 2017 trailed behind.

The financial services companies bumped bonds from International Paper Co. and Dow Chemical Co. that had been heavily traded for much of the week.

Bank, broker CDS widen

The credit-default swaps for bank and brokerage names moved wider by late Friday, following the trend of spread movement, a trader said.

They were out 5 to 10 bps across the board, he said.

ConocoPhillips bond tightens

An outstanding 4.75% bond due 2012 from ConocoPhillips Co. was about 45 bps tighter than the previous week, a source said late Friday.

Among news on the energy company was that Warren Buffett's Berkshire Hathaway Inc. company had sold some of its Conoco shares, according to a story from Bloomberg.

The energy company also announced it's making major modifications to a platform in Norway.

A 5.65% bond due 2012 from Genworth Financial Inc. was nearly 90 bps worse than a week ago. An analyst at Citigroup Inc. downgraded shares from the insurance and financial company, causing its shares to fall as well.

© 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.