Primary pauses as blizzard hits northeast; Citigroup tightens; Home Depot better; Apple soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Jan. 27 – The investment-grade primary bond market was empty of new deals on Tuesday, as a blizzard pummeled the northeastern United States.

Sources were expecting a quiet primary session, with driving bans in place and public transportation suspended in New York City.

Looking forward, another muted session is expected for Wednesday, as the Federal Reserve wraps up its Federal Open Market Committee’s two-day policy meeting.

So far, the market has seen around $8.6 billion of new issuance this week, a far cry from what sources were predicting to be around $25 billion to $30 billion of supply.

Investment-grade bonds headed out mostly unchanged on the day, while credit spreads were weaker, sources said.

The Markit CDX North American Investment Grade index eased 1 basis point to a spread of 67 bps.

Citigroup Inc.’s 2.5% notes due 2019 firmed 4 bps to 5 bps in secondary trading.

Home Depot, Inc.’s 4.4% notes due 2045 tightened about 1 bp.

Apple Inc.’s notes (Aa1/AA+/) headed out flat to softer.

Citigroup firms

Citigroup’s 2.5% notes due 2019 firmed 4 bps to 5 bps over the day to 95 bps bid, a source said.

Citigroup priced $2 billion of the notes (Baa2/A-/A) on July 22, 2014 at a spread of Treasuries plus 85 bps.

The bank is based in New York.

Home Depot improves

Home Depot’s 4.4% notes due 2045 (A2/A/) firmed about 1 bp to 126 bps bid during the session, a market source said.

Home Depot sold $1 billion of the bonds at Treasuries plus 105 bps on June 9, 2014.

The home improvement retailer is based in Atlanta.

Apple eases

In other trading, Apple’s 2.1% notes due 2019 eased 1 bp to 19 bps bid, a market source said.

Apple placed $2 billion of the notes on April 29, 2014 at a spread of Treasuries plus 37.5 bps.

The company’s 3.45% notes due 2024 widened about 5 bps to 72 bps bid, the source said.

Apple sold $2.5 billion of the notes at Treasuries plus 77 bps in the April 29, 2014 offering.

The computer and mobile communications devices company is based in Cupertino, Calif.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices rose on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs were 1 bp wider at 70 bps bid, 73 bps offered. Citigroup’s CDS costs were also 1 bp wider at 81 bps bid, 85 bps offered. JPMorgan Chase & Co.’s CDS costs rose 1 bp to 69 bps bid, 74 bps offered. Wells Fargo & Co.’s CDS costs ended unchanged at 48 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs were 1 bp higher at 73 bps bid, 76 bps offered. Morgan Stanley’s CDS costs ended flat at 80 bps bid, 85 bps offered. Goldman Sachs Group, Inc.’s CDS costs increased 1 bp to 89 bps bid, 92 bps offered.

Paul Deckelman contributed to this review.

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