High-grade issuers stay on sidelines; market tone strong; credit spreads continue to tighten

By Cristal Cody

Tupelo, Miss., Nov. 4 – Investment-grade issuers remained on the sidelines for a third consecutive session on Wednesday with votes still being counted in the U.S. presidential election.

No corporate issuers have tapped the primary market so far this week, sources said.

In the only bond issue reported this week, Freddie Mac priced $3 billion of three-year Reference Notes on Tuesday.

Zero to about $10 billion of investment-grade corporate volume was expected by syndicate sources this week.

Market tone was exuberant over the day despite the uncertainty remaining around the presidential election.

The iShares iBoxx Investment Grade Corporate Bond ETF closed up 1.5% at $136.11.

The PIMCO Investment Grade Corporate Bond index climbed 1.14% on the day to $115.44.

Equities rallied. The Nasdaq shot up 3.85%, the S&P 500 gained 2.2% and the Dow Jones industrial average rose 1.34%.

High-grade credit spreads have tightened more than 7 basis points week to date.

The Markit CDX North American Investment Grade 35 index firmed 2.73 bps over Wednesday’s session to a spread of 57.27 bps.

Looking ahead, the Federal Reserve will conclude its two-day monetary policy meeting on Thursday.

On Friday, the Labor Department will release the October non-farm payroll report. No major policy changes are expected, a market source said.

Earnings releases also remain in focus with more than 300 companies posting third quarter results on Wednesday and hundreds more set to release quarterly reports on Thursday and Friday, sources note.

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