Morning Commentary: Kraft bonds active; Credit Suisse paper eases; credit spreads flat

By Cristal Cody

Tupelo, Miss., March 26 – Kraft Foods Group Inc.’s 5% bonds due 2042 are active in secondary trading following the company’s announcement on Wednesday that it will be acquired by the H.J. Heinz Co. in a deal valued at $36.6 billion, a source said early Thursday.

Credit Suisse Group Funding (Guernsey) Ltd.’s 3.75% senior notes due 2025 brought on Monday traded 3 basis points weaker at the start of the day, a market source said.

Investment-grade credit spreads were flat over the morning, according to sources.

Three-month Libor yield was unchanged at 27 bps.

The Markit CDX North American Investment Grade series 23 index closed on Wednesday 2 bps wider at a spread of 64 bps.

Kraft active

Kraft Foods’ 5% bonds due 2042 were quoted at 166 bps offered in the secondary market early Thursday, a source said.

The bonds (Baa2/BBB/) traded at 110.61 over the morning.

The bonds traded as high as 113.52 and as low as 107.74 in Wednesday’s session, according to Trace.

Kraft sold $2 billion of the bonds on May 30, 2012 at 99.293 to yield 5.046%, or a spread of 235 bps over Treasuries.

The consumer packaged food and beverages company is based in Northfield, Ill.

Credit Suisse eases

Credit Suisse Group Funding’s 3.75% notes due 2025 were quoted 3 bps weaker at 178 bps offered, a market source said.

The notes (A2/ BBB+/A) priced in a $2.5 billion offering on Monday at Treasuries plus 187.5 bps.

Credit Suisse Group Funding is a financial services company based in Zurich.

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