Primary silent; Citigroup widens; bank, financial paper soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Dec. 16 – The investment-grade primary bond market was silent again on Tuesday, as the Federal Reserve kicked off its two-day Federal Open Market Committee meeting.

Potential issuers remained on the sidelines during their “last chance” to access the primary before the end of the calendar year, a market source said.

So far, no new deals have sold this week.

Sources had predicted around $5 billion of new issuance to price prior to the end of 2014.

Another muted primary session is expected for Wednesday, with the market focused on the Fed’s policy statement.

Investment-grade bonds and credit spreads remained weaker on Tuesday, according to market sources.

The Markit CDX North American Investment Grade series 23 index eased 2 basis points to a spread of 76 bps.

Citigroup Inc.’s 3.75% notes due 2024 widened 10 bps over the day, according to a source.

Bank of America Corp.’s 4% notes due 2024 traded 3 bps weaker in the secondary market, a source said.

Morgan Stanley & Co. Inc.’s 3.875% notes due 2024 eased 3 bps, according to a market source.

Citi widens 10 bps

Citigroup’s 3.75% notes due 2024 (Baa2/A-/A) traded 10 bps wider over the session to head out at 144 bps bid, a market source said.

The bank sold $1.25 billion of the 10-year notes on June 9, 2014 at Treasuries plus 115 bps.

Citigroup is based in New York City.

Bank of America eases

Elsewhere in the bank and financial bond sector, Bank of America’s 4% notes due 2024 (Baa2/A-/A) eased 3 bps to 146 bps bid, a market source said.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

Morgan Stanley soft

Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) headed out over the afternoon 3 bps softer at 153 bps offered, a market source said.

Morgan Stanley sold $3 billion of the notes at a spread of Treasuries plus 130 bps on April 23.

The financial services company is based in New York City.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS prices were higher on Tuesday, according to a market source.

Bank of America’s CDS costs were 2 bps wider at 71 bps bid, 75 bps offered. Citigroup’s CDS costs were 4 bps higher at 76 bps bid, 80 bps offered. JPMorgan Chase & Co.’s CDS costs rose 2 bps to 62 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were also 2 bps higher at 49 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs upped 2 bps to 74 bps bid, 77 bps offered. Morgan Stanley’s CDS costs ended 4 bps wider at 87 bps bid, 91 bps offered. Goldman Sachs Group’s CDS costs were 5 bps higher at 91 bps bid, 95 bps offered.

Paul Deckelman contributed to this review.

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