Primary empty, week unlikely to meet expectations; Assured Guaranty widens; AIG mixed

By Cristal Cody and Aleesia Forni

Virginia Beach, July 10 – The high-grade primary market was empty of new issuance on Thursday.

Earnings blackouts, coupled with a softer tone to the day’s market, kept issuers on the sidelines during the session.

Issuance this week has been fairly light, with the market seeing around $11.8 billion of new issuance.

The week’s total is unlikely to meet expectations of what sources had predicted to be around $15 billion of supply.

“We’ll see,” a source said.

Trading activity was “very quiet,” a trader said.

Investment-grade bonds traded mostly weaker over the afternoon, according to market sources.

The Markit CDX North American Investment Grade series 22 index eased 1 basis point to a spread of 58 bps.

American International Group Inc.’s senior notes (Baa1/A-/BBB+) brought on Wednesday traded flat to softer, according to a trader.

Assured Guaranty US Holdings Inc.’s 5% senior notes due 2024 have widened since the issue priced in June, according to a trader. The notes traded about 1 bp weaker on the day and more than 20 bps wider from issuance.

American International mixed

American International Group’s 2.3% notes due 2019 firmed to 66 bps bid, 63 bps offered, according to a trader.

AIG sold $1 billion of the five-year notes on Wednesday at a spread of Treasuries plus 67 bps.

The company’s tranche of 4.5% bonds due 2044 eased to 123 bps bid, 119 bps offered, the trader said.

AIG priced $1.5 billion of the bonds at Treasuries plus 117 bps.

The insurance company is based in New York City.

Assured Guaranty widens

Assured Guaranty’s 5% notes due 2024 (Baa2/A/) headed out at 259 bps offered, a trader said.

The notes ended at 99.33 to yield 5.086%, up from 99 to yield 5.129% on Wednesday, according to a market source.

The company sold $500 million of the notes on June 17 at Treasuries plus 237.5 bps, or 99.795, to yield 5.026%.

The Hamilton, Bermuda-based company is the U.S. holding company for municipal bond insurer Assured Guaranty Ltd.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS costs rose, according to a market source.

Bank of America Corp.’s CDS costs widened 3 bps to 70 bps bid, 74 bps offered. Citigroup Inc.’s CDS costs eased 3 bps to 69 bps bid, 73 bps offered. JPMorgan Chase & Co.’s CDS costs rose 3 bps to 56 bps bid, 60 bps offered. Wells Fargo & Co.’s CDS costs eased 2 bps to 45 bps bid, 50 bps offered.

Merrill Lynch’s CDS costs widened 3 bps to 75 bps bid, 79 bps offered. Morgan Stanley’s CDS costs rose 2 bps to 72 bps bid, 76 bps offered. Goldman Sachs Group, Inc.’s CDS costs widened 3 bps to 75 bps bid, 80 bps offered.

Paul Deckelman contributed to this review.

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