Credit fears keep primary empty, supply may return Tuesday; volatility continues in secondary

By Aleesia Forni and Andrea Heisinger

New York, June 24 - Treasury yields fell Monday as the credit markets sat mostly empty of new deals, sources said.

There were no investment-grade offerings on tap, with only about $10 billion of supply expected for the week.

"It's just kind of slow out there," a source said. "Not a lot of people looking [to sell]."

There are continuing concerns about credit both in the United States and in Asia, China specifically for the latter region.

Tuesday could see a return of new bonds into the market, a syndicate source said.

"Depends on how the market opens," the source said.

Another source said they saw the possibility of a couple of trades Tuesday, again depending on the market tone.

"Probably only people who really need to go for some reason," the source said. "No opportunistic [issuers] out there now."

Volatility in the high-grade bond market continued on Monday, as spreads were mostly weaker on the day, sources said.

The Markit CDX North American Investment Grade index was 4 basis points wider at a spread of 98 bps at the session's close.

A trader saw Agilent Technologies, Inc.'s recent deal 2 bps wider at 195 bps bid, 190 bps offered.

The company priced the $600 million of 3.875% 10-year senior notes at a spread of Treasuries plus 175 bps on Tuesday.

The bioanalytic and electronic measurement technology company is based in Santa Clara, Calif.

Investment-grade bank and brokerage credit default swap costs rose on Monday, according to a market source.

Bank of America Corp.'s CDS costs were 10 bps higher at 146 bps bid, 151 bps offered. Citigroup Inc.'s CDS costs rose 15 bps to 141 bps bid, 146 bps offered. JPMorgan Chase & Co.'s CDS costs rose 6 bps to 102 bps bid, 107 bps offered. Wells Fargo & Co.'s CDS costs were up 3 bps at 78 bps bid, 83 bps offered.

Merrill Lynch's CDS costs rose 10 bps to 130 bps bid, 140 bps offered. Morgan Stanley's CDS costs increased 12 bps to 190 bps bid, 195 bps offered. Goldman Sachs Group, Inc.'s CDS costs were also 13 bps higher at 177 bps bid, 182 bps offered.

Paul Deckelman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.