Primary pauses to close week; active week for issuance ahead; Marathon Oil mostly flat

By Aleesia Forni and Cristal Cody

Virginia Beach, June 5 – Primary activity quieted on Friday to close out June’s opening week, while the market focused on a strong May jobs report.

The Labor Department reported that 280,000 jobs were added during the month, well above the 225,000 forecast, while the unemployment rate rose slightly to 5.5% from 5.4%.

No new deals priced during the session, capping off a week that saw more than $23 billion of new issuance.

This total fell just short of what was predicted to be around a $25 billion week.

Meantime, Lipper reported $231 million of inflows into corporate high-grade funds for the week ended May 27, bringing the year-to-date total to roughly $29.1 billion of inflows.

Lipper reported $127 million of outflows for the prior week.

Sources are calling for a more active primary week ahead, with around $25 billion to $30 billion of supply predicted.

“Next week could be very busy,” one market source noted, adding that the new issuance total may even top those predictions.

Investment-grade bonds were mixed in secondary trading on Friday, while credit spreads remained soft, market sources said.

Marathon Oil Corp.’s senior notes (Baa1/BBB/) priced on Monday traded flat to 1 basis point better.

Barclays plc’s 2.875% senior notes due 2020 were unchanged.

Time Warner Inc.’s bonds (Baa2/BBB) headed out 2 bps to 3 bps wider.

Home Depot Inc.’s bonds (A2/A/A) traded 2 bps better.

Oracle Corp.’s senior notes (A1/AA-/A+) were flat to 3 bps tighter in the secondary market.

AT&T Inc.’s bonds (/BBB+/A-) traded 2 bps better over the day.

Verizon Communications Inc.’s bonds were mostly wider. Verizon announced in May it will acquire AOL Inc. for $4.4 billion.

The Markit CDX North American Investment Grade series 23 index ended the day 1 bp weaker at a spread of 67 bps.

“Credit sold off this week, and IG CDX is now trading at its wides since the March roll,” Barclays Bank analysts said in a note on Friday. “After a huge supply month of $155 [billion] in May, spreads are 10 bps off late April levels and within 5 bps of the wides of the past two years.”

Marathon Oil flat to better

Marathon Oil’s 3.85% notes due 2025 firmed 1 bp to 170 bps bid on Friday, according to a market source.

The company sold $900 million of the notes on Monday at Treasuries plus 170 bps.

Marathon Oil’s 5.2% bonds due 2045 were unchanged at 222 bps bid.

The bonds priced in a $500 million offering on Monday at Treasuries plus 225 bps.

The international energy company for oil sands mining and gas exploration and production is based in Houston.

Barclays unchanged

Barclays’ 2.875% notes due 2020 were unchanged on Friday at 140 bps bid in the secondary market, a source said.

Barclays sold $1 billion of the notes (Baa3/BBB/A) on Monday at Treasuries plus 142 bps.

The financial services company is based in London.

Time Warner eases

Time Warner’s 3.6% notes due 2025 eased 3 bps to 151 bps bid during the day, a source said.

The company sold $1.5 billion of the notes on May 28 at Treasuries plus 150 bps.

Time Warner’s 4.85% debentures due 2045 traded 2 bps weaker at 189 bps bid.

The company sold $600 million of the debentures in the May 28 offering at Treasuries plus 195 bps.

The media company is based in New York.

Home Depot improves

Home Depot’s 2.625% notes due 2022 firmed 2 bps to 69 bps bid on Friday, a market source said.

The company sold $1.25 billion of the notes at Treasuries plus 80 bps on May 28.

Home Depot’s 4.25% notes due 2046 headed out 2 bps better at 128 bps bid.

The company sold $1.25 billion of the bonds in the May 28 deal at Treasuries plus 135 bps.

The home improvement retailer is based in Atlanta.

Oracle mixed

Oracle’s 2.95% notes due 2025 were unchanged at 103 bps bid, according to a market source.

Oracle sold $2.5 billion of the notes on April 28 at Treasuries plus 100 bps.

The company’s 4.125% bonds due 2045 firmed 3 bps to 137 bps bid on Friday.

Oracle sold $2 billion of the bonds at 145 bps plus Treasuries in the April 28 offering.

The computer software and technology company is based in Redwood City, Calif.

AT&T better

AT&T’s 3.4% notes due 2025 firmed 2 bps to 165 bps bid, a market source said.

The company sold $5 billion of the notes on April 23 at a spread of Treasuries plus 150 bps.

AT&T’s 4.75% bonds due 2046 traded 2 bps better at 216 bps bid.

AT&T sold $3.5 billion of the bonds in the April 23 sale at Treasuries plus 215 bps.

The telecommunications company is based in Dallas.

Verizon soft

Verizon’s 3.5% notes due 2024 eased 2 bps to 141 bps bid on Friday, a market source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Bank/brokerage CDS costs rise

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

Bank of America Corp.’s CDS costs were 1 bp higher at 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs rose 1 bp to 75 bps bid, 78 bps offered. JPMorgan Chase Bank, NA’s CDS costs were unchanged at 62 bps bid, 65 bps offered. Wells Fargo & Co.’s CDS costs rose 1 bp to 46 bps bid, 49 bps offered.

Merrill Lynch’s CDS costs were 1 bp higher at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs were flat at 75 bps bid, 78 bps offered. Goldman Sachs Group, Inc.’s CDS costs remained flat at 84 bps bid, 88 bps offered.

Paul Deckelman contributed to this review.

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