Midday Commentary: Secondary market digests Merck's large offering, notes trade tighter

By Aleesia Forni

Virginia Beach, Va., May 16 - Following Wednesday's $6.5 billion mega-deal from Merck, the secondary market was somewhat less active on Thursday, according to a market source.

The source added that Merck's deal saw "strong demand," and all four fixed-rate tranches were trading tighter early during the session

The $1 billion of 0.7% notes due 2016 were quoted 2 bps tighter at 30 bps bid, 28 bps offered early during the session.

The notes were priced at 32 bps over Treasuries on Wednesday.

Meanwhile, the $1 billion of 1.3% notes due 2018 were quoted 1 bp better at 51 bps bid, 46 bps offered following Wednesday's pricing with a spread of 52 bps over Treasuries.

The $1.75 billion of 2.8% notes due 2023 traded 3 bps better at 84 bps bid, 83 bps offered.

Merck sold the notes at Treasuries plus 87 bps.

The $1.25 billion of 4.15% notes due 2043 firmed 3 bps to 99 bps bid, 97 bps offered following its sale at Treasuries plus 102 bps.

The sale also included $500 million of three-year floating-rate notes priced at par to yield Libor plus 19 bps and $1 billion of five-year floaters sold at par to yield Libor plus 36 bps.

The health-care company is based in Whitehouse Station, N.J.

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