US Bond Markets Expecting Only Smaller Issues To Price

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

Gilead Sciences (NASDAQ:GILD)
Historical Stock Chart
From Jun 2024 to Jul 2024