Primary void of new deals; coming week seen sparse; Best Buy notes widen; telecoms hold

By Andrea Heisinger and Cristal Cody

New York, Dec. 16 - The high-grade bond market ended the week with no new deals on Friday, and the coming week is seen as having sparse issuance.

A source said that it was "hard to tell" if there was any change in the bond market's tone for the day as there were no deals to test the market's sentiment.

Belgium's two-notch credit rating downgrade by Moody's Investors Service was "not unexpected," the source said.

"I mean, we're probably going to see more of that from the ratings agencies," he said.

The coming week is expected to have little in the way of issuance as syndicate desks shut down prior to the holidays and companies that don't need financing before the end of 2011 wait until January to access the market.

"I think we're looking at less than $10 [billion]," a syndicate source said. "We're not seeing anything concrete."

Overall trading volume dropped nearly 20% to less than $8 billion.

Best Buy Co., Inc.'s bonds still traded wider on Friday after widening every day since announcing weaker earnings earlier in the week.

"Spreads continue to widen a little bit," a trader said. "Probably this week they're about 20, 30 [basis points] wider going out."

Also in trading, telecom bonds had widened earlier in the week but on Friday, bonds from AT&T, Inc. and others are "somewhat tighter," one trader said.

Bonds overall traded weaker in the thin trading. The Markit CDX Series 17 North American investment-grade index eased 1 bp to a spread of 131 bps.

Treasuries were stronger on Friday. The 10-year note yield fell to 1.85% from 1.91%. The 30-year bond yield dropped to 2.85% from 2.92%.

Best Buy wider

Best Buy's 5.5% senior notes due 2021 traded late Friday at 435 bps bid, 425 bps offered, the trader said.

"On Dec. 13, they were trading at 405 [bps], 395 [bps]," the trader said. "Spreads continue to push wider on this credit."

The notes priced on March 8, 2011 at a spread of 200 bps over Treasuries.

The electronics and entertainment retailer is based in Richfield, Minn.

AT&T better

AT&T's notes traded mostly flat to slightly better on Friday after widening earlier in the week, sources said.

The 5.8% notes due 2019 traded unchanged at 120 bps going out.

The telecommunications company is based in Dallas.

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