Quiet primary closes short week; activity to resume in week ahead; Tyson active; Disney stable

By Aleesia Forni and Cristal Cody

Virginia Beach, May 30 - The high-grade primary market was muted to close the Memorial Day holiday-shortened week on Friday.

With no new deals pricing during the last trading session of May, the abbreviated week's supply remained at more than $13 billion, falling short of earlier estimates of $15 billion to $20 billion.

This week's issuance was less than half of the $30 billion of supply the high-grade market saw the previous week.

Despite the drop in new deals, sources note that conditions for issuance remain solid.

Lipper reported $690 million of inflows into corporate investment-grade funds for the week ended May 21, down from the previous week's inflows of $871 million.

This brings the year-to-date figure to roughly $39 billion.

The month of May saw another onslaught of new high-grade deals hitting the primary, according to Prospect News data, with $100.34 billion of new deals pricing, bringing the year-to-date total issuance to $507.79 billion.

A busy primary is expected to kick off the month of June next week, with around $20 billion to $25 billion of supply predicted.

Investment-grade bond spreads remained mostly flat on quiet month-end activity, sources said.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 62 basis points.

The session's trading activity was "on the light side," a trader said. "Volume on IG [is] just about $9 billion."

Tyson Foods, Inc.'s 4.5% notes due 2022 were active during the session following the company's unsolicited $50.00-a-share cash bid on Thursday for Hillshire Brands Co., according to market sources. Tyson's offer tops Pilgrim's Pride Corp.'s unsolicited offer made on Tuesday for Hillshire by $5.00 a share.

Walt Disney Co.'s 1.85% senior notes due 2019 traded slightly better from where the notes priced on Wednesday, according to a trader.

Tyson trades

Tyson Foods' 4.5% notes due 2022 traded as low as 120 bps offered in the morning and were seen closer to 125 bps offered late Friday afternoon, a trader said.

The notes climbed to 107 over the day from 105.5 on Thursday, according to a market source.

Tyson Foods (Baa3/BBB/BBB) sold $1 billion of the notes on June 6, 2012 at 99.458 to yield 4.568%, or a spread of 290 bps over Treasuries.

The beef, pork and poultry company is based in Springdale, Ark.

Disney stable

Walt Disney's 1.85% notes due 2019 traded at 39 bps offered on Friday, a trader said.

Disney sold $750 million of the five-year notes (A2/A/A) on Wednesday at Treasuries plus 40 bps. The debt was part of a $2 billion deal spread across four tranches.

The entertainment and media company is based in Burbank, Calif.

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