Corporate Bonds Recover Early Losses to End Flat
May 17, 2011
Junk traders said the market's less buoyant recovery Tuesday was the result of its resilience during a significant fall in Treasurys last week. Investment-grade yield spreads were unchanged in light trading. Tuesday's only new issuers were federal agencies, which sold some $200 million of debt. Corporations are expected to spend much of the week preparing new issues, with a few seen starting to trickle into the market Wednesday. In ratings actions, Standard & Poor's Ratings Group assigned a preliminary single-A-minus rating to the $1 billion shelf registration for medium-term notes filed last week by McDonnell Douglas. A McDonnell Douglas spokesman said proceeds are earmarked for the repayment of maturing debt and other general corporate purposes. Yield spreads on the debt of Dominique's Finer Foods tightened by 0.25 percentage point Tuesday on news its parent, Dominique's Supermarkets, filed Friday with the Securities and Exchange Commission for a $150 million initial public stock offering. Markets were closed Monday for the Labor Day holiday. The company's 10.875% guaranteed senior subordinated notes due 2020 were trading Tuesday at a yield spread of 2.35 percentage points above Treasurys, compared with a spread of 2.60 over last Friday. The yield spread is the difference in the yield of a given debt instrument and that of a similar-term Treasury issue, with a tightening of the spread suggesting a decreased perception of risk. On Wednesday, Capital One Financial of Falls Church, Va., is expected to sell $200 million of 10-year debt with a three-year put option through lead manager J.P. Morgan Securities Inc.. A put is an option to sell a security at a specified price, usually within a limited period.
VastPress 2011 Vastopolis
