Fannie Mae issues notes; Quebec sets price talk; Bank of America, Morgan Stanley tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 27 – Fannie Mae entered the investment-grade bond primary market on Thursday with a $3 billion new issue as the market’s tone continued to improve.

The government-backed mortgage lender sold the issue in line with price talk.

Also on Thursday, the Province of Quebec announced price talk for a $250 million offering of three-year floaters.

Primary activity has been light to close out August, with only a reported $3.85 billion of supply coming to market this week.

The Canadian primary markets have been quiet over the past week.

“It would take a brave issuer to get something done,” one source said.

Credit spreads firmed 3 basis points to 4 bps over the session.

The Markit CDX North American Investment Grade index was seen late afternoon 3 bps tighter at a spread of 80 bps.

In the secondary market, Bank of America Corp.’s 3.875% senior notes due 2025 tightened more than 10 bps on Thursday.

Morgan Stanley’s 4% senior notes due 2025 traded 10 bps tighter over the day.

Barclays plc’s 5.25% senior notes due 2045 recovered some losses to trade wrapped around issuance.

Lloyds Bank plc’s 2.7% senior notes due 2020 firmed 8 bps.

JPMorgan Chase & Co.’s 3.9% senior holding company notes due 2025 were unchanged in secondary trading.

Fannie Mae taps market

Fannie Mae priced $3 billion of 1.125% Benchmark Notes due Oct. 19, 2018 at Treasuries plus 17 bps on Thursday, according to a company press release.

The notes were sold in line with talk.

Pricing was at 99.838 to yield 1.178%.

By region, 88% of orders were from the United States and 7% of orders came from Asia.

By investor type, fund managers picked up 55%, commercial banks picked up 16%, central banks 12%, corporate and pensions 9%, state and local governments 5%, insurance companies 3% and foundations and non-profits less than 1%.

Barclays, Deutsche Bank Securities Inc. and Nomura Securities International, Inc. are the joint lead managers.

The government-backed mortgage lender is based in Washington, D.C.

Quebec on deck

The Province of Quebec is planning to price a $250 million offering of three-year floating-rate notes, according to a market source.

The notes are talked at the Libor plus 23 bps area.

BofA Merrill Lynch, BMO Capital, J.P. Morgan Securities LLC and RBC Capital Markets LLC are the bookrunners.

Bank of America tightens

Bank of America’s new 3.875% senior notes due 2025 traded late afternoon at 183 bps bid, better than where the notes headed out on Wednesday at 196 bps bid, a market source said.

Bank of America sold $2.5 billion of the 10-year notes (Baa1/A-/A) on July 27 at a spread of Treasuries plus 167 bps.

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

Morgan Stanley improves

Morgan Stanley’s 4% notes due 2025 tightened 10 bps in the secondary market to 160 bps bid, according to a market source.

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.

Barclays firms

Barclays’ 5.25% notes due 2045 firmed 6 bps to 235 bps bid on Thursday, a market source said.

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

The financial services company is based in London.

Lloyds better

Lloyds Bank’s 2.7% notes due 2020 tightened 8 bps in the secondary market to 102 bps bid on Thursday, a market source said.

Lloyds sold $1 billion of the notes (A1/A/A+) on Aug. 10 at 110 bps over Treasuries.

The retail bank is based in London.

JPMorgan steady

JPMorgan Chase’s 3.9% notes due 2025 were unchanged on the day at 157 bps bid, according to a market source.

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

The financial services company is based in New York City.

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