Morning Commentary: High-grade bond market quiet on early close; volume tops forecasts

By Cristal Cody

Tupelo, Miss., April 18 – Market action stayed quiet at the start of Thursday’s session following heavier-than-expected high-grade bond issuance for the holiday week.

Thin activity is expected over the short market day with desks lightly staffed.

The bond markets will close early at 2 p.m. ET on Thursday and reopen on Monday following the Good Friday holiday.

Corporate issuers priced about $19 billion of investment-grade bonds week to date, compared to syndicate forecasts of about $10 billion to $15 billion of supply.

Deal volume this week has been led by bank and financial supply, including Bank of America Corp.’s $4.5 billion two-part sale of notes on Wednesday, Citigroup Inc.’s $2.75 billion of six-year notes on Tuesday and JPMorgan Chase & Co.’s $1.5 billion reopening of 3.964% senior fixed-to-floating rate notes due Jan. 15, 2048 on Tuesday.

In addition, Walmart Inc. priced a $4 billion three-part deal on Tuesday.

New issues have traded mostly stronger in the secondary market, sources report.

Secondary market volume increased to $21.81 billion on Wednesday from $20.37 billion on Tuesday and $17.3 billion on Monday, according to Trace data.

Citigroup’s 3.352% senior notes due April 24, 2025 (A3/BBB+/A) went out on Thursday 6 basis points tighter than where the notes priced Tuesday at par to yield a spread of Treasuries plus 95 bps.

Walmart’s 3.25% notes due July 8, 2029 (Aa2/AA/AA) were quoted going out on Thursday 2 bps better than issuance.

The discount retailer sold $1.25 billion of the notes on Tuesday at a Treasuries plus 67 bps spread.

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