High-grade primary empty in light of Fed; Boeing flat; Citigroup eases; Walgreens improves

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 28 – The investment-grade primary market took a breather on Wednesday, with participants focused on the conclusion of the Federal Open Market Committee’s two-day policy meeting.

The Federal Reserve elected to hold interest rates steady at the near-zero level, citing slower job gains in its statement following the meeting.

Additionally, a line regarding global and financial developments restraining economic activity and putting downward pressure on inflation was removed from the statement.

The decision by the Federal Reserve came as no surprise to most market players, with one source adding that he also does not expect an interest rate hike to come following the December policy meeting.

Primary activity is likely to resume in the session ahead, with issuers taking advantage of solid market conditions prior to what is predicted to be a busy month of November.

So far, the week has seen $15.85 billion of new high-grade paper price, closing in on what was predicted to be $20 billion of supply.

Bonds mixed

Investment-grade bonds were mixed in secondary trading over the day.

Boeing Co.’s new 2.6% senior notes due 2025 (A2/A/A), which priced on Tuesday, traded wrapped around issuance.

Citigroup Inc.’s new 4.45% subordinated notes due 2027 headed out softer.

Walgreens Boots Alliance Inc.’s 3.8% senior notes due 2024 tightened more than 10 bps on Wednesday after the bonds widened in the previous session on the news it plans to buy Rite Aid Corp. in a deal valued at $17.2 billion.

The notes were quoted 20 bps wider on Tuesday.

Moody’s Investors Service said on Wednesday that it placed the ratings of Walgreens Boots Alliance and subsidiary Walgreen Co. on review for downgrade.

Boeing unchanged

Boeing’s 2.6% senior notes due 2025 were quoted flat at 85 bps bid in secondary trading on Wednesday, according to a market source.

Boeing sold $300 million of the bonds on Tuesday at a spread of Treasuries plus 85 bps.

The aerospace company is based in Chicago.

Citigroup softens

Citigroup’s 4.45% subordinated notes due 2027 traded late afternoon wider at 238 bps bid, a market source said.

The notes were quoted early in the day 3 bps weaker at 233 bps offered.

Citigroup sold $1.5 billion of the notes (Baa3/ BBB+/A-) in a reopening on Friday at 233 bps plus Treasuries.

The company originally sold $2 billion of the notes on Sept. 23 at Treasuries plus 235 bps.

The banking and financial services company is based in New York.

Walgreens better on day

Walgreens Boots Alliance’s 3.8% notes due 2024 tightened to 178 bps bid from where the bonds traded in the 190 bps area on Tuesday, according to a market source.

The company sold $2 billion of the notes (Baa2/BBB/) on Nov. 6 at Treasuries plus 145 bps.

Walgreens Boots Alliance is the parent company of Deerfield, Ill.-based drugstore operator Walgreen.

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