New Corporate Bonds Outperforming Amid Light Issuance Thursday
January 12 2012 - 12:30PM
Dow Jones News
Investor demand for new corporate bond issuance is upbeat but
the week's calendar has dried up after a robust three days saw
$22.7 billion of investment-grade issuance.
"The market is a little exhausted," a syndicate manager in New
York said. "We're just letting some earlier deals digest."
Only a $400 million issue of five-year notes from The Kroger Co.
(KR) has been shopping for buyers as of late-morning, and issuance
is expected to remain slow Friday as the market eases into the
Martin Luther King Jr. long weekend. Early pricing guidance has the
Kroger bonds being marketed at 140 basis points over the Treasury
rate.
"The week was expected with a $20 billion type of number, and we
are well over that," said Brian Cogliandro, head of syndicate at
Mitsubishi UFJ Securities. "It has nothing to do with the tone or
investor appetite, it's just that certain people had the ability to
move deals a couple of days up, but others with a later calendar
didn't have that ability."
Investors who purchase in the primary market continue to be
rewarded as new issues have improved substantially this week.
Five-year bonds from Rabobank Nederland were recently trading at
a spread to Treasurys of 2.34 percentage points, versus the 2.58
point spread they were priced at Wednesday in a $2.5 billion
offering, MarketAxess shows.
Energy Transfer Partners' (ETP) 10- and 30-year bonds, issued
Tuesday, have improved 13 basis points and 21 basis points since
pricing. Their respective spreads to Treasurys are now 3.12
percentage points and 3.29 points.
Broader secondary market activity indicates the market is still
in a bullish mode, although Markit's CDX North America
Investment-Grade Index, a benchmark measure, is up 0.7% now versus
a 1.1% improvement earlier in the session.
Markit's CDX North America High-Yield index is flat, whereas it
was up 0.3% earlier.
Eight of the top 10 most actively traded bonds Thursday have
improved versus Treasurys, according to MarketAxess, which has
reported more than $5 billion of trading volume as of 11:30 p.m.
EST.
-By Patrick McGee, Dow Jones Newswires; 212-416-2382;
patrick.mcgee@dowjones.com
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