Primary muted as market focuses on FOMC statement; Apple bonds mixed; El Paso better

By Cristal Cody and Aleesia Forni

Virginia Beach, April 30 - The high-grade primary market was muted on Wednesday, with players focused on the release of the statement from the Federal Open Market Committee following its two-day meeting this week.

As expected, the Federal Reserve announced another $10 billion reduction to its bond-purchasing program.

The high-grade market has seen more than $17 billion of new issuance this week, with Tuesday's jumbo deal from Apple Inc. helping to bump up the week's supply.

The company came to market with a $12 billion seven-part offering of senior notes in three-, five-, seven-, 10- and 30-year tranches.

So far, the week's issuance total has fallen in line with earlier predictions of a $15 billion to $20 billion week.

One source noted that there are "a few" deals lined up for pricing to kick off the month of May on Thursday, though activity is expected to continue to be light.

Spreads ended unchanged to slightly tighter as traders focused on economic data and the Federal Reserve's policy rate announcement.

The Markit CDX North American Investment Grade series 22 index firmed 2 basis points to a spread of 64 bps.

"Volume is $14 billion, but it didn't seem like it," a trader said. "It was a little on the quiet side this morning, and then the GDP came out; that just caught a lot of people off guard."

The Commerce Department reported the gross domestic product increased at a 0.1% rate in the first quarter, well below the 1.1% expected. In the fourth quarter, the GDP increased 2.6%.

The week's main data comes on Friday when the Labor Department releases the April job report.

In the secondary market, Apple's new bonds (Aa1/AA+/) priced in the $12 billion seven-tranche offering on Tuesday remained among the most active investment-grade issues of the day.

"The old 30-year and the new 10-year are the most actives," a trader said.

The paper headed out mixed in trading.

El Paso Pipeline Partners Operating Co. LLC's new 4.3% senior notes due 2024 traded a touch tighter in Wednesday's session, according to a trader.

Morgan Stanley & Co. Inc.'s 3.875% notes due 2024 are trading mostly flat but are about 2 bps better than where the paper priced a week ago, a trader said.

Apple mixed

Apple's 1.05% notes due 2017 headed out on Wednesday softer than where the notes traded in the aftermarket after pricing in the previous session, according to a trader.

The notes were quoted at 17 bps bid, 15 bps offered late afternoon, wider from where the notes traded late Tuesday at 14 bps bid, 8 bps offered.

Apple sold $1.5 billion of the three-year notes at 18 bps over Treasuries.

The company's 2.1% notes due 2019 firmed 1 bp to 33 bps bid, 35 bps offered on Wednesday.

Apple sold $2 billion of the notes at Treasuries plus 37.5 bps.

The tranche of 2.85% notes due 2021 tightened 1 bp to 54 bps bid, 53 bps offered, according to the trader. The notes were seen late Tuesday at 55 bps bid, 53 bps offered.

The company sold $3 billion of the seven-year notes at a spread of Treasuries plus 60 bps.

Apple's 3.45% notes due 2024 traded mostly unchanged at 77 bps bid, 75 bps offered.

The company priced $2.5 billion of the 10-year notes at a spread of Treasuries plus 77 bps.

On the long end of the offering, Apple's 4.45% notes due 2044 traded 1 bp weaker at 101 bps bid, 99 bps offered.

The company sold $1 billion of the bonds at Treasuries plus 100 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

El Paso Pipeline's 4.3% notes

El Paso Pipeline Partners' 4.3% senior notes due 2024 were last seen trading early Wednesday at 158 bps offered, a trader said.

The notes (Ba1/BBB/BBB-) traded in the aftermarket after pricing on Tuesday at 161 bps bid, 157 bps offered.

The company sold $600 million of the notes at Treasuries plus 160 bps.

Houston-based El Paso Pipeline owns and operates natural gas transportation and storage facilities.

Morgan Stanley flat

Morgan Stanley's 3.875% notes due 2024 traded unchanged during the session at 128 bps offered, according to a trader.

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

The financial services company is based in New York City.

Bank/brokerage CDS flat to lower

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

Bank of America Corp.'s CDS costs were flat at 66 bps bid, 69 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 2 bps to 53 bps bid, 56 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 34 bps bid, 37 bps offered.

Merrill Lynch's CDS costs were unchanged at 71 bps bid, 75 bps offered. Morgan Stanley's CDS costs firmed 1 bp to 70 bps bid, 75 bps offered. Goldman Sachs Group, Inc.'s CDS costs tightened 2 bps to 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

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