Primary quiet; new bonds soften; Barclays, Lloyds, Deutsche paper widens; credit spreads ease

By Cristal Cody

Eureka Springs, Ark., June 24 – Investment-grade primary action stayed quiet on Friday, while bonds were mostly weaker following the surprise results of the Brexit vote.

Credit spreads widened over the day. The Markit CDX North American Investment Grade index opened Friday 9 basis points wider and closed 10 bps weaker at a spread of 87 bps.

U.S. high-grade primary action is expected to pick up in the week ahead after the mid-June lull with about $10 billion to $20 billion of volume forecast ahead of the July 4 holiday weekend.

Most of the new issues priced over the week were weaker in secondary trading on Friday.

Commonwealth Edison Co.’s $1.2 billion offering of mortgage bonds (A2/A-/A) priced in two tranches were quoted about 5 bps to 6 bps wider than issuance.

Broadridge Financial Solutions, Inc.’s 3.4% senior notes due 2026 traded softer on Friday.

Bank and financial paper mostly widened following Britain’s vote to leave the European Union.

Barclays plc’s paper moved out about 35 bps to 40 bps on Friday.

Lloyds Bank plc’s 2.7% notes due 2020 widened 20 bps during the session.

Deutsche Bank AG’s 4.1% notes due 2026 headed out 20 bps weaker.

Royal Bank of Scotland Group plc’s split-rated 4.8% notes due 2026 also ended the day lower.

Commonwealth Edison eases

Commonwealth Edison’s 2.55% notes due 2026 traded softer at 93 bps bid, 89 bps offered in the secondary market on Friday, a source said.

The company sold $500 million of the 10-year bonds at par to yield a spread of 87.5 bps over Treasuries on June 20.

Commonwealth Edison is a unit of Chicago-based energy provider Exelon Corp.

Broadridge trades wider

Broadridge’s notes traded wider on Friday at 177 bps bid, 173 bps offered, according to a market source.

The notes were flat in the secondary market on Thursday at 175 bps offered.

The company sold $500 million of the notes (Baa1/BBB+/BBB+) on Tuesday at a spread of 175 bps over Treasuries.

Broadridge Financial is a Lake Success, N.Y.-based producer of goods and services for securities processing, clearing and outsourcing, and investor communications.

Barclays widens

Barclays’ 2.875% notes due 2020 widened to 200 bps bid from 165 bps bid on Thursday, a market source said.

The company sold $1 billion of the notes (Baa3/BBB/A) on June 1, 2015 at Treasuries plus 142 bps.

The financial services company is based in London.

Lloyds softens

Lloyds Bank’s 2.7% notes due 2020 widened 20 bps to 97 bps bid on Friday, according to a market source.

The company sold $1 billion of the notes (A1/A/A+) on Aug. 10, 2015 at Treasuries plus 110 bps.

The retail bank is based in London.

Deutsche Bank weakens

Deutsche Bank’s 4.1% notes due 2026 widened 20 bps on the day to 264 bps bid, a market source said.

The bank sold $750 million of the notes (A3/BBB+/A-) on Jan. 8, 2016 at Treasuries plus 200 bps.

The bank is based in Frankfurt.

RBS lower

Royal Bank of Scotland’s 4.8% senior notes due 2026 ended the day lower at 102.51, a source said.

The notes (Ba1/BBB-/BBB+) traded at 102.87 over the morning, down from as high as 104.86 on Thursday.

Royal Bank of Scotland priced $1.5 billion of the 10-year notes on March 30 at 99.819 to yield 4.823% and a spread of Treasuries plus 300 bps.

The financial services company is based in Edinburgh.

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