Financials to lead 2016 high-grade bond supply; Bank of America, Citigroup paper firms

By Aleesia Forni and Cristal Cody

New York, Dec. 23 – Financial names are expected to make up the bulk of what is predicted to be more than $100 billion of new investment-grade issuance in January, market sources say.

A mix of Yankee and U.S. issuers are expected to enter the primary market to open the new year.

Issuance in the coming year is expected to be front-loaded, with potential issuers expected to tap the market prior to any additional rate hike measures taken by the Federal Reserve.

The forecasted busy month of January will come on the heels of what has been a primary market drought for the latter part of December.

Around $58 billion of new issuance has priced so far this month, all coming to market prior to Dec. 10.

No new deals are expected to price for the remainder of 2015.

Investment-grade bank and financial paper remained flat to mostly better, and credit spreads continued to improve over the quiet trading day.

Bank of America Corp.’s 3.875% senior notes due 2025 tightened 4 basis points.

Citigroup Inc.’s 2.65% notes due 2020 firmed 3 bps.

Morgan Stanley’s 4% senior notes due 2025 were unchanged.

The Markit CDX North American Investment Grade 25 index closed 3 bps tighter on Wednesday at a spread of 90 bps.

Bank of America tightens

Bank of America’s 3.875% senior notes due 2025 firmed 4 bps on Wednesday to 145 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 is based in Charlotte, N.C.

Citigroup better

Citigroup’s 2.65% notes due 2020 traded 3 bps tighter at 110 bps bid in late afternoon secondary trading, a market source said.

Citigroup sold $2.7 billion of the notes (Baa1/A-/A) on Oct. 19 at a spread of 133 bps over Treasuries.

The financial services company is based in New York.

Morgan Stanley steady

Morgan Stanley’s 4% notes due 2025 were flat in the secondary market on Wednesday at 141 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.

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