High-grade primary stays quiet for third session; credit spreads firm; Charter active

By Cristal Cody

Tupelo, Miss., July 5 – Investment-grade bond market activity remained quiet over the session following the Independence Day holiday, according to market sources on Thursday.

High-grade corporate issuers have stayed out of the market as July opened with no bond offerings reported week to date. Desks also are thinly staffed due to holiday vacations over the back half of the week.

Syndicate sources had expected primary activity for the week to range from nothing to up to $5 billion of volume.

Deal supply is predicted to remain thin until banks and financial companies exit earnings blackout periods in mid-July.

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. will kick off the releases when the companies post second quarter earnings results on July 13.

The Markit CDX North American Investment Grade 30 index closed the day about 1 basis point improved from Tuesday at a spread of 66 bps.

The three-month Libor yield was unchanged on Thursday at 2.34%, a market source said.

Coming up on Friday, the Labor Department will release the June jobs report.

Charter better

In the secondary market, Charter Communications, Inc.’s 4.5% senior secured notes due Feb. 1, 2024 (Ba1/BBB-/BBB-) priced a week ago remained active over the session and headed out better at 100.46, according to a market source.

The notes were quoted mid-morning at 100.38 and last traded on Tuesday at 100.31. The bonds traded as high as 101.38 a day after issuance.

Charter subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. sold $1.1 billion of the notes on June 28 at 99.893 to yield 4.521%, or a spread of Treasuries plus 180 bps.

The broadband communications company is based in Stamford, Conn.

Funds see small inflow

Investment-grade corporate funds saw an inflow, but drastically reduced from the week before, according to fund-flow statistics generated by AMG Data Services Inc.

In the week to July 4, the cash addition was $171 million versus the previous week’s $1.542 billion.

That followed a moderate gain of $411 million the week before and a healthier $2.038 billion inflow the week before that, up sharply from $1.325 billion the previous week and following inflows of $0.849 billion, $2.529 billion, $3.069 billion, $0.804 billion and $0.997 billion in the preceding weeks.

The IG funds continue to have seen 10 inflows in the last 10 weeks, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

Apart from the Feb. 14 and Feb. 21 weeks, every week so far this year has seen positive flows and in fact before those two weeks in February investment-grade corporates saw a 21-week run of inflows dating back to mid-September, according to a Prospect News analysis of the data.

The latest influx of cash raises the year-to-date inflow for the IG corporates to $52.37 billion from $52.20 billion, once more a new peak for the year so far.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.