By John Balassi
NEW YORK, Sept 26 (IFR) – US high-grade issuance slowed to a
single Yankee deal on Wednesday, with the Yom Kippur holiday
helping to keep volumes subdued.
After US$10.1bn was sold on Monday, only two countable deals
totaling US$600m have come to the market since with the weight
of three straight $30bn weeks of primary issuance may be finally
having an impact as the secondary market is trading weaker.
Furthermore, broad investor sentiment looks fragile with
renewed worries over the eurozone, and with companies continuing
to warn about slower-than-expected growth in the global economy.
On the economic front, August new home sales figures have
seemingly thrown a wrench into the housing market recovery with
new home sales unexpectedly falling 0.3% to 373,000, versus
expectations for a rise to 380,000.
Credit is underperforming with investors hesitant to buy
despite these wider spreads, after the Barclays US Corporate
Investment Grade Index closed on Tuesday at 2.82%
yield-to-worst, a new all-time low. In single-name credits, bank
names are underperforming with the Goldman 5.75% 2022 bonds
trading 14bps wider at T+236bps and the Bank of America 5.705
2022 bonds trading 10bps wider at T+210bps.
In CDX, weakness in credit has accelerated throughout the
morning, with the IG19 leaking 2 1/4bps wider at 104 and HY18
trading 3/4 of a point lower at 99.50. Treasury 10-year yields are
4 1/2bps lower to 1.637%, as risk-adverse investors are clearly
on the defensive with Treasuries higher for an eighth straight
day.
Recent new issues are starting to show some fatigue with
investors, and several benchmark bonds now trading wider in the
secondary market. The JPM 3.25% 2022 bonds that priced last week
at T+155bps are now trading at T+162bps. The VOD 2.50% 2022
bonds are weaker at T+90bps, after pricing at T+87.5bps last
week. But the UPS 3.625% 2042 bonds are flat after pricing on
Monday at T+80bps.
The only high-grade deal in the market today is actually
looking to price tighter than initial guidance. The Industrial
Bank of Korea (Aa3/A) launched a $300m three-year RegS/144A deal
at T+115bps. Deutsche Bank and Standard Charter are the joint
books. Initial price talk was T+130bps area.
Last week Korea Exchange Bank issued a $300m RegS only bond
at T+155bps. It saw an order-book of over $4bn, and was the
second Korean issuer to sell 3-year US dollar-denominated paper
this year after KEXIM priced a $300m deal in March.
U.S. Treasuries……….
U.S. Treasury outlook…
U.S. corporate bonds….
U.S. agencies………..
U.S. mortgage-backeds…
U.S. asset-backeds……
U.S. municipal bonds…
(Reporting by John Balassi; editing by Alex Chambers)
