Midday Commentary: Investment-grade bond spreads tight; Deutsche flat, Credit Suisse firms

By Cristal Cody

Tupelo, Miss., May 27 - The investment-grade bond market returned after the Memorial Day holiday to tighter spreads, according to market sources early Tuesday.

The Markit CDX North American Investment Grade series 22 index closed on Friday 1 basis point tighter at a spread of 63 bps.

"Credit spreads are edging tighter this morning and sit near the tightest level of the year despite the $80 billion of supply that the U.S. investment grade market has absorbed in the last two weeks," RBC Capital Markets, LLC analysts said in a note on Tuesday.

Traders were busy digesting the heavy round of economic data released on Tuesday, including durable goods orders, consumer confidence and manufacturing activity.

Financial paper remained active but mixed in the secondary market following new issuance in the previous week, according to a market source.

Deutsche Bank AG, London Branch's 3.7% notes due 2024 brought on Thursday were flat in early trading, a source said.

Credit Suisse AG's notes priced on Thursday tightened about 7 bps from issuance, according to a market source.

Deutsche unchanged

Deutsche Bank's 3.7% notes due 2024 (A/A2/A+) traded mostly flat at 118 bps offered, according to a market source early Tuesday.

Deutsche sold $1.6 billion of the 10-year notes as part of a $3.5 billion three-part offering on Thursday at Treasuries plus 120 bps.

The financial services company is based in Frankfurt.

Credit Suisse firms

Credit Suisse's 2.3% notes due 2019 tightened to 73 bps offered, according to a market source.

Credit Suisse, acting through its New York branch, priced $2 billion of the five-year notes as part of a $5 billion three-tranche deal on Thursday at Treasuries plus 80 bps.

The financial services company is based in Zurich.

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