Morning Commentary: Zoetis tightens in secondary market; Microsoft mixed; credit spreads flat

By Cristal Cody

Tupelo, Miss., Nov. 10 – High-grade bonds were mixed in early secondary trading on Tuesday.

Zoetis Inc.’s new 4.5% senior notes due 2025 that priced on Monday traded about 6 basis points tighter than issuance.

Microsoft Corp.’s senior notes (Aaa/AAA/AA+) were mixed with the long end stronger.

The Markit CDX North American Investment Grade 25 index was unchanged at the start of the session after closing on Monday 2 bps wider at a spread of 81 bps.

Secondary trading thinned on Monday to $12.9 billion of investment-grade issues traded, down from $12.06 billion of bonds traded on Friday, according to Trace.

Zoetis firms

The 4.5% notes due 2025 that Zoetis priced on Monday traded better at 212 bps offered in secondary trading early Tuesday, according to a market source.

The company sold $750 million of the notes (Baa2/BBB-) at a spread of Treasuries plus 218 bps.

Zoetis is a New York City-based animal health subsidiary of Pfizer Inc.

Microsoft mixed

Microsoft’s 2% notes due 2020 eased 3 bps to 41 bps offered, a market source said.

The company sold $2.25 billion of the notes on Oct. 29 at a spread of Treasuries plus 50 bps.

The tranche of 4.45% bonds due 2045 firmed 3 bps to 135 bps offered in secondary trading.

Microsoft sold $3 billion of the bonds in the Oct. 29 sale at Treasuries plus 150 bps.

The computer software company is based in Redmond, Wash.

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