High-grade primary wraps slow week following Fed decision; bank, financial paper mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 18 – Despite some chatter of a possible rare Friday trade, the high-grade bond primary market was ultimately empty of new issuance on Friday following Thursday’s Federal Reserve rate decision.

The slower week hosted roughly $8.3 billion of supply, well below expectations of around $25 billion to $30 billion.

This figure also follows last week’s frenzied primary, which saw more than $47 billion of new issuance.

Meantime, Lipper reported $737 million of outflows from corporate investment-grade bond funds for the week ended Sept. 16, down from last week’s inflows of $416 million.

Next week should see issuers return to the primary in full force, with sources calling for around $30 billion of supply.

Investment-grade bank and financial paper was mixed in secondary trading on Friday, while credit spreads leaked wider over the session.

JPMorgan Chase & Co.’s 3.9% senior holding company notes due 2025 tightened 1 basis point.

Bank of America Corp.’s 3.875% senior notes due 2025 eased 1 bp in the secondary market.

Barclays plc’s notes were flat to 1 bp weaker.

HSBC Holdings plc’s 4.25% subordinated notes due 2025 headed out unchanged on Friday.

Morgan Stanley’s 4% senior notes due 2025 traded 3 bps wider.

The Markit CDX North American Investment Grade index widened 1 bp to a spread of 78 bps.

Quebec details sale

Details of Quebec’s recently priced $200 million add-on to its existing floating-rate notes due Sept. 4, 2018 emerged on Friday in a 424B3 filed with the Securities and Exchange Commission.

The tap priced at 100.006 on Thursday, and the notes carry a coupon of Libor plus 23 bps.

TD Securities (USA) LLC was the lead manager.

The issue’s total size is now $900 million, including $700 million priced on Aug. 28.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS prices were mostly higher on Friday, according to a market source.

Bank of America Corp.’s CDS costs rose 1 bp to 75 bps bid, 77 bps offered. Citigroup Inc.’s CDS costs were also 1 bp higher at 83 bps bid, 86 bps offered. JPMorgan Chase & Co.’s CDS costs were up 1 bp to 74 bps bid, 77 bps offered. Wells Fargo & Co.’s CDS costs were flat at 55 bps bid, 57 bps offered.

Merrill Lynch’s CDS costs increased 1 bp to 78 bps bid, 82 bps offered. Morgan Stanley’s CDS costs ended 1 bp higher at 82 bps bid, 84 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp higher at 91 bps bid, 93 bps offered.

JPMorgan firms

JPMorgan Chase’s 3.9% notes due 2025 traded 1 bp tighter at 158 bps bid in the secondary market on Friday, a source said.

JPMorgan Chase sold $2.5 billion of the notes (A3/A/A+) on July 14 at 155 bps over Treasuries.

The financial services company is based in New York City.

Bank of America eases

Bank of America’s 3.875% senior notes due 2025 eased 1 bp to 157 bps bid, a market source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at 167 bps over Treasuries.

The financial services company based in Charlotte, N.C.

Barclays soft

Barclays’ 5.25% notes due 2045 traded 1 bp softer at 211 bps bid, a market source said.

Barclays sold $1.5 billion of the bonds (Baa3/BBB/A) on Aug. 10 at Treasuries plus 235 bps.

The financial services company is based in London.

HSBC stable

HSBC’s 4.25% notes due 2025 were unchanged on Friday at 213 bps bid, according to a market source.

HSBC sold $1.5 billion of the notes (A2/A+) on Aug. 10 at a spread of Treasuries plus 212 bps.

The banking and financial services company is based in London.

Morgan Stanley widens

Morgan Stanley’s 4% notes due 2025 eased 3 bps over the session to 157 bps bid, a source said.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

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.