Volatile conditions continue to hamper investment grade trading at end of week with few new issues

By Andrea Heisinger

Omaha, Aug. 3 - The word "volatile" was on investment-grade traders' lips much of the past week as hazardous market conditions meant few new issues, and the trend continued Friday.

"Things went out very weakly today," one market source said Friday.

The credit crunch is moving to the bonds of bigger banks, another market source said.

"The sell-offs are exacerbated by people giving up and getting out," the source commented.

While some companies are waiting for more favorable market conditions, others chose to go ahead with new issues.

General Electric Capital Corp. had the big issue of the week with $2 billion in 30-year global notes, while Fifth Third Bancorp had $500 million in 7.25% trust preferred securities.

Two other issues this week were in conservative structures meant to test the waters, market sources said.

Coca-Cola Enterprises and Target Corp. both issued $500 million in two-year floating-rate notes.

Next week should see an upturn in new issues, one market source said.

"I think we'll start to see some stability and firming," the source said. "We'll certainly see some new issuers coming to try the market. I've heard there are certain accounts with lots of cash ready to be put to work."

Other news at week's end was Boston Scientific Corp. having its credit rating downgraded to BB+ to BBB- by Standard & Poor's.

Market sources reported that the company's CDS fell 80 basis points on the offer side and 90 on the bid side between the morning and afternoon, landing at 310 bps and 330 bps.

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