Primary market halts for payrolls data; Morgan Stanley, Citigroup soft; Time Warner widens

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 7 – The investment-grade bond market was quiet to close the week on Friday, with participants focused on the all-important payrolls data for clues regarding a possible interest rate increase in September.

The Labor Department said that the American economy added 215,000 jobs during July. The total fell short of forecasts of 223,000.

The unemployment rate held steady at 5.3%.

In total, $21.6 billion of new investment-grade bond issuance sold to open the first week of August, falling short of what was predicted to be around $25 billion to $30 billion of supply.

Meantime, Lipper reported outflows of $740 million from corporate investment-grade funds this week, bringing the year-to-date inflows to $28.1 billion.

This follows last week’s outflows of $1.26 billion.

Looking forward, sources are expecting mostly smaller-sized deals to make up what is predicted to be around a $25 billion week.

Investment-grade bonds were seen mostly flat to softer over the session and credit spreads remained weak.

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

Morgan Stanley’s 2.65% notes due 2020 eased 5 bps in the secondary market.

Citigroup Inc.’s 3.3% senior notes due 2025 headed out 4 bps weaker in trading.

Time Warner Inc.’s 3.6% notes due 2025 continued to widen over the day.

The Markit CDX North American Investment Grade index ended 1 bp weaker at a spread of 75 bps.

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