High-grade supply quiets on early close, strong volume; corporate inflows decline; bonds flat

By Cristal Cody

Tupelo, Miss., April 18 – Investment-grade activity stayed quiet over the short market session on Thursday with no reported issuance.

Thin action was expected with desks lightly staffed ahead of the Good Friday holiday.

The bond markets closed early at 2 p.m. ET and will reopen on Monday.

Corporate issuers priced about $19 billion of investment-grade bonds over the week, compared to syndicate forecasts of about $10 billion to $15 billion of supply.

Deal volume this week was led by bank and financial supply, including Bank of America Corp.’s $4.5 billion two-part sale of notes on Wednesday, Citigroup Inc.’s $2.75 billion of six-year notes on Tuesday and JPMorgan Chase & Co.’s $1.5 billion reopening of 3.964% senior fixed-to-floating rate notes due Jan. 15, 2048 on Tuesday.

In addition, Walmart Inc. priced a $4 billion three-part deal on Tuesday.

Lipper US Fund Flows on Thursday reported corporate investment-grade fund inflows of $2.31 billion for the week ended Wednesday, compared to $3.47 billion in the previous week and $2.9 billion in the week prior to that.

New issues have traded better in the secondary market, but bonds were mostly unchanged on Thursday, sources said.

Citigroup’s new 3.352% senior notes due April 24, 2025 traded flat on the day.

The company’s existing paper was mixed with issues seen trading about 2 basis points tighter to as much as 4 bps wider, a source said.

Walmart’s 3.25% notes due July 8, 2029 headed out unchanged from Wednesday.

The Markit CDX North American Investment Grade 32 index was steady over the day at a spread of 57 bps.

Citigroup stable

Citigroup’s 3.352% fixed-to-floating rate senior notes due April 24, 2025 (A3/BBB+/A) were unchanged at 89 bps bid in secondary trading over the short market session, a source said.

The company sold $2.75 billion of the notes on Tuesday at par to yield a spread of Treasuries plus 95 bps.

Initial price talk was in the Treasuries plus 110 bps area.

The notes will reset April 24, 2024 to a floating rate of Libor plus 89.6 bps.

The financial services company is based in New York.

Walmart unchanged

Walmart’s 3.25% notes due July 8, 2029 were flat on Thursday at 65 bps bid, a market source said.

The company sold $1.25 billion of the notes (Aa2/AA/AA) on Tuesday at a Treasuries plus 67 bps spread.

Price guidance was in the Treasuries plus 70 bps area, with initial talk at the Treasuries plus low 80 bps area.

The discount retailer is based in Bentonville, Ark.

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