Corporate bonds are maintaining their firm bid and are 5 basis points to 10 basis points on the day. One salesman noted that anything spread more than 100 basis points over treasuries is probably 10 basis points tighter.
Colgate priced $ 300 million 6 year Treasuries at a yield of 3.176. That is advertised as a spread of 67 basis points. But here is the rub. It is 67 basis points over the 5 year Treasury and this is a 6 year bond.
There is an apples to orange mismatch here as with the steepness of the Treasury curve that is really only about 35 basis points to the comparable Treasury as the curve is worth about 32 basis points.
What makes that trade even more stupid (really stupid) is that at the pricing yield one could extend a year to the seven year point on the curve and own the 7 year treasury about even yield even yield to the Colgate Palmolive bond.
Safeway sold $ 500 million 10 year bonds today. The initial price talk was 175/180. The deal priced at 158 and is now 142 /138.