Kommunalbanken reopens floaters; Viacom notes trade 10 bps-17 bps better; CDS costs decline

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 29 - The investment-grade primary bond market saw yet another session with no new issuance in the U.S. corporate space on Thursday, though there was a new issue from Kommunalbanken AS during the day's session.

The lender sold a $300 million add-on to its floating-rate notes due 2016 at par to yield 8.15 basis points.

Meanwhile, Freddie Mac announced it would forgo a sale of Reference Notes, according to a press release on Thursday.

As expected, the days leading up to the extended Labor Day holiday weekend have been mostly empty of new corporate deals.

One market source noted that the situation in Syria and the possibility of military action in that region remains a major concern, while the 10-year Treasury yield reached 2.825% on Thursday.

Verizon Communications Inc.'s bonds widened about 15 bps in secondary trading on Thursday following reports the broadband and telecom company is negotiating to purchase Vodafone Group plc's stake in Verizon Wireless, but other bonds in the telecom sector tightened, sources said.

Viacom Inc.'s bonds (Baa2/BBB/BBB) sold earlier in the month are trading about 10 bps to 17 bps better since issuance, a trader said.

Credit spreads tightened overall on Thursday, according to market sources.

The Markit CDX Series 20 North American Investment Grade index declined 1 bp to a spread of 82 bps.

Kommunalbanken adds on

In primary news, Kommunalbanken reopened its issue of floating-rate notes due March 18, 2016 to add $300 million, an informed source said on Wednesday.

The coupon is Libor plus 8.15 bps. Pricing was at par.

Total issuance will be $950 million.

Credit Suisse Securities, Nomura Securities and TD Securities were the bookrunners.

The government-funded lender to municipalities is based in Oslo.

Viacom trades better

Viacom's 4.25% notes due 2023 traded better at 168 bps bid, 165 bps offered going out on Thursday, a trader said.

Viacom sold $1.25 billion of the notes at a spread of Treasuries plus 178 bps on Aug. 12.

The company's 5.85% bonds due 2043 have tightened nearly 20 bps since they priced in the same offering earlier in the month, the trader said.

The 5.85% bonds went out on Thursday at 203 bps bid, 200 bps offered. The New York-based media entertainment company sold $1.25 billion of the 30-year bonds at a spread of Treasuries plus 220 bps.

CDS costs lower

Investment-grade bank and brokerage credit default swap costs declined on Thursday, a market source said.

Bank of America Corp.'s CDS costs firmed 1 bp to 110 bps bid, 114 bps offered. Citigroup Inc.'s CDS costs fell 2 bps to 101 bps bid, 105 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 88 bps bid, 93 bps offered. Wells Fargo & Co.'s CDS costs ended 1 bp lower at 63 bps bid, 67 bps offered.

Merrill Lynch's CDS costs firmed 1 bp to 103 bps bid, 110 bps offered. Morgan Stanley's CDS costs tightened 1 bp to 139 bps bid, 144 bps offered. Goldman Sachs Group, Inc.'s CDS costs closed 3 bps lower at 130 bps bid, 134 bps offered.

Paul Deckelman contributed to this review

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