Morning Commentary: Investment-grade primary market quiets; supply thin week to date

By Cristal Cody

Tupelo, Miss., Oct. 15 – Investment-grade primary action waned on Thursday with no reported issuers at the start of the session.

Corporate and sovereign, supranational and agency supply totals about $13 billion week to date, with the bulk so far from SSA issuers.

SSA volume totals $8 billion, while corporate issuers have priced $4.9 billion of bonds week to date.

About $15 billion to $20 billion of volume was expected following the Columbus Day holiday with focus mostly centered on quarterly earnings results from U.S. banks and potential issuance that could follow.

Morgan Stanley reported third-quarter profit results on Thursday, following Bank of America Corp., Goldman Sachs Group Inc. and Wells Fargo & Co. on Wednesday and JPMorgan Chase & Co. and Citigroup Inc. on Tuesday.

A deal is expected soon from Blackstone/GSO Secured Lending Fund, which wrapped a two-day session of fixed income investor calls and a virtual roadshow on Wednesday for a Rule 144A and Regulation S offering of dollar-denominated senior notes (Baa3//BBB-), a source said.

High-grade secondary trading also has been light this week with $19.97 billion of bonds traded on Wednesday, down from $20.68 billion on Tuesday, Trace data shows.

Market tone was soft at the open on declining hopes of additional Covid-19 stimulus for Americans before the U.S. presidential election in November and a growing number of infections that has put European cities back into lockdowns to stem the infection rate, sources report.

The Labor Department on Thursday reported softer initial unemployment claims for the week ended Oct. 10. Seasonally adjusted initial claims totaled 898,000, up 53,000 from the prior week and higher than the 825,000 forecasted.

The Nasdaq was down 1.5%, while the S&P 500 was off 1.01% in early trading.

The Pimco Investment Grade Corporate Bond index declined 0.22% to 115.42 at the open.

The iShares iBoxx Investment Grade Corporate Bond ETF dipped 0.07% to 135.62.

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