Quiet week’s supply tops expectations; General Electric soft; GE Capital tightens

By Aleesia Forni and Cristal Cody

Virginia Beach, April 10 – The high-grade primary was empty of new issuance on Friday, closing out a “very, very quiet” week for the market.

Still, the primary market managed to host around $20 billion of new issuance, topping what was predicted to be around a $10 billion to $15 billion week.

Meanwhile, Lipper reported inflows of $211 million into corporate high-grade bond funds for the week ended April 9, the lowest inflow of the year so far.

The total was down from last week’s year-low inflows of $491 million, bringing the year-to-date total inflows to $25.34 billion.

Sources are expecting another relatively subdued week ahead, with financials accounting for the bulk of supply and around $15 billion of issuance predicted.

General Electric Capital Corp.’s bonds tightened as much as 10 basis points to 15 bps over the day following General Electric Co.’s announcement early Friday that it will sell most of GE Capital Corp.’s assets over the next two years, market sources said.

“Lots of secondary activity in GECC,” one source said.

General Electric’s bonds traded 1 bp to 3 bps softer over the session.

In other trading, JPMorgan Chase & Co.’s 3.125% notes due 2025 were flat.

Goldman Sachs Group Inc.’s senior notes (Baa1/A- /A) reopened in late March were mostly unchanged.

Southwestern Energy Co.’s 4.95% senior notes due 2025 remained strong in secondary trading.

Exxon Mobil Corp.’s 2.709% notes due 2025 were tighter on the week.

Market activity was mostly quiet on Friday, except for in General Electric Capital bonds, sources said.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 61 bps.

GE to sell banking business

General Electric announced on Friday that it would sell most of its General Electric Capital banking business and shift focus to its industrial business.

GE added that it plans to retain its vertical financing businesses, GE Capital Aviation Services, Energy Financial Services and Healthcare Equipment Finance, that directly relate to its core industrial businesses.

The company said there is potential to return more than $90 billion to investors in dividends, buybacks and the Synchrony Financial exchange through 2018.

Following the announcement, Moody’s downgraded General Electric from Aa3 to A1, while leaving GE Capital’s rating unchanged at A1.

Sources note that in the near-term, the announcement will likely have little effect on the investment-grade market.

However, the company will be added to the list of would-be borrowers who could enter the market to secure financing for share buybacks, mergers or acquisitions.

GE Capital tightens

General Electric Capital’s 2.2% notes due 2020 traded at 44 bps bid late afternoon, tighter than where the paper traded at 52 bps bid on Wednesday, a source said.

The issue priced on Jan. 6 in a $2 billion offering at Treasuries plus 75 bps.

GE Capital’s 3.45% notes due 2024 headed out as the session closed on Friday better at 68 bps bid, a market source said.

The notes were quoted at 72 bps bid, 66 bps offered at the start of the session, in from the 78 bps area on Thursday, a trader said.

The notes were seen on Wednesday at 85 bps bid, a source said.

GE Capital sold $1 billion of the notes on May 12, 2014 (A1/AA+/) at Treasuries plus 85 bps.

The financial products and services subsidiary of General Electric Co. is based in Norwalk, Conn.

GE notes soft

General Electric’s 5.25% global notes due 2017 were seen at 63 bps bid late Friday, about 1 bp to 2 bps wider, a source said.

GE sold $4 billion of the notes on Nov. 29, 2007 at a spread of Treasuries plus 140 bps.

The infrastructure and financial services company is based in Fairfield, Conn.

JPMorgan flat

JPMorgan Chase’s 3.125% notes due 2025 headed out unchanged at 121 bps bid on Friday, a market source said.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Goldman stable

Goldman Sachs’ 3.5% notes due 2025 traded mostly unchanged at 137 bps bid, according to a market source.

Goldman reopened the issue on March 25 in an $800 million tap at Treasuries plus 145 bps. The notes originally priced in a $1.7 billion offering at 170 bps plus Treasuries on Jan. 20.

The financial services company is based in New York City.

Southwestern Energy strong

Southwestern Energy’s 4.95% notes due 2025 were seen about 5 bps better on the week at 261 bps bid, according to a market source.

Southwestern Energy sold $1 billion of the notes (Baa3/BBB-/) on Jan. 20 at Treasuries plus 318 bps.

The independent natural gas and oil company is based in Houston.

Exxon Mobil steady

Exxon Mobil’s 2.709% notes due 2025 were flat at 59 bps bid over the session but headed out about 4 bps tighter than where the bonds traded at the start of the week, a market source said.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA/) on March 3 at Treasuries plus 58 bps.

The oil and gas company is based in Irving, Texas.

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