Corporate Bonds

March 31st, 2009 2:46 pm | by John Jansen |

Corporate bonds were wider earlier but have rallied and are a basis point or two  tighter on the day. The ebullient stock market and some end of month buying turned the tide.

There was some light new issuance activity today and the deals came with robust coupons.

Ingersoll Rand is BBB+ and lowered guidance recently. They are on watch for another downgrade.

Against that background they chose to issue 5 year notes today. They are talking a coupon of 9 1/2 to 9 5/8 . That is pretty wide to the 5 year Treasury at about 1.75 percent.

Black and Decker is in the market and as a syndicate desk trader said to me it looks as though there arent too many folks buying tools these days. They are BBB and priced $350 million 5 years with  a 9 1/4 coupon.

The syndicate desk luminary with whom I conversed as well as a portfolio manager (each friends of the blog) suggest that issuance should wane as we head into spring and summer.

Pfizer did a huge deal as did Roche. Verizon,ATT and some tech names have been to the market. Financial names prefunded themselves with heavy FDIC issuance  in the current quarter. These folks will not be reprising their efforts in Q2.

Additionally, the performance of the recent VZ deal will temper the enthusiasm of issuers. The deal is better bid now at 378 versus pricing of 388 but in the first flush of trading the issue went underwater and traded in the 390s.

Couple the aforementioned with a recession economy and you have a recipe for light issuance.

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