Morning Commentary: High-grade primary action thins ahead of Fed decision; secondary active

By Cristal Cody

Tupelo, Miss., Dec. 13 – Light deal action is expected in the high-grade bond market on Wednesday with attention centered on a widely expected rate hike later in the day by the Federal Reserve.

Rates are expected to be raised by 25 basis points, a source said.

One issuer announced plans early Wednesday to tap the primary market. Kingstone Cos., Inc. is marketing senior notes.

Secondary market volume has been strong in the first two sessions with $18.57 billion of bonds traded on Tuesday and $14.96 billion of issues traded on Monday, according to Trace.

In early trading on Wednesday, Amazon.com, Inc.’s 3.15% notes due Aug. 22, 2027 were unchanged at 100.51, a market source said.

Amazon.com sold $3.5 billion of the notes on Aug. 15.

The Seattle-based online commerce company is conducting an exchange in December of 5.2% senior notes due 2025 from Whole Foods Markets Inc., which it acquired in August for $13.7 billion in cash. The tender offer for the bonds expires on Dec. 19.

In other retail secondary trading, Kroger Co.’s 3.7% senior notes due Aug. 1, 2027 (Baa1/BBB/BBB) softened to 100.14 in mid-morning trading from 100.78 on Tuesday.

The Cincinnati-based grocer sold $600 million of the notes on July 17 at 99.941 to yield 3.707%.

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