Bond Market: Corporate Bonds
Corporate bond spreads in the secondary market are unchanged to about 10 basis points tighter. The improvement is in finanacials which have been ravaged of late. One participant thinks that the secondary market will narrow appreciably next week as the solid footing of the stock market will encourage some risk taking. He thought that spreads have for the most part been frozen this week in deference to the heavy supply calendar of late.
As an example of supply pressure another participant cited the fate of a Marathon Oil 10 year issued several weeks ago at T+ 488. It journeyed to + 450 and has proceeded to leaker wider and has made the round trip as it sits 490/480 today.
Valero sold $750 million 10 years at + 650 and $250 million 30 years at + 688. Each issue is about 70 cheap to comps.
General Electric bonds are closing unchanged. The 4.80s of 2013 are wide but real at 625/575.
Several participants thought the pace of issuance would remain strong next week as there will be no Treasury issuance next week to muddy the waters.
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