US Bond Markets Expecting Only Smaller Issues To Price
December 08 2011 - 11:27AM
Dow Jones News
Syndicate desks are expecting Thursday to be the slowest
new-issuance day of the week so far, but a few issuers are prepared
to access the markets in what could be the final days of
opportunity for 2011.
"We anticipate being in the market with a couple deals," said
one syndicate source. "I don't know if you'll see the same-size
deals as earlier in the week."
He mentioned the market's tone was a little weaker this morning
and said some issuers might want to hold off until next week.
The highly anticipated European Union summit in Brussels begins
Thursday. The latest news was far from comforting as the Wall
Street Journal reported that certain central banks have been
thinking about how to resuscitate currencies that were taken out of
circulation with the introduction of the euro in 2002.
"What we see is mixed," added another syndicate source. "The
calendar could be fairly light today. We've done a lot of issuance
this week and it's getting to the end of the year."
Monday and Tuesday were heavy sessions with $16.6 billion
hitting the market, and Wednesday added nearly $3 billion thanks to
billion-dollar offerings from Viacom Inc. (VIA, VIAB) and ERP
Operating. With expectations for the week at $15 billion - $20
billion, it's not clear any large offerings are on deck to be
marketed.
"If we get any negative news out of Europe, we believe we'll be
shut down this year," said a third syndicate source who expects a
few deals Thursday. "There might be only three viable issuance days
left of the year. But if we get positive news, we expect next week
to see a surge of activity."
A benchmark index of the U.S. corporate-bond market, Markit's
CDX North America Investment-Grade Index, deteriorated 0.2%
overnight, indicating that conditions are relatively stable, but
perhaps not encouraging.
The Barclays Capital Corporate Bond Index widened, or worsened,
three basis points Wednesday to a 235 basis point spread over
Treasuries. Month-to-date, however, the index has improved nine
basis points.
In early secondary trading, Gilead Sciences (GILD) 4.4% coupon,
10-year notes weakened two basis points against benchmark
Treasurys, according to MarketAxess. Viacom's 3.875% coupon,
10-year notes were flat in early trading with a spread to Treasurys
of 197 basis points, compared to the 205 basis point spread they
priced at on Tuesday.
-By Patrick McGee, Dow Jones Newswires; 212-416-2382;
patrick.mcgee@dowjones.com
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