Corporate bonds steady after weak US data

Despite a surprising drop in US February payrolls data, European corporate bonds held steady on Friday, as thin volumes prevented the credit market from showing a heated reaction.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 60.9 basis points more than similarly dated government bonds at 1601 GMT, 0.2 basis points more on the day.
"There was initial selling right after the jobs data release, but it has calmed down now," said a bond trader in London.
The US Labour Department said private-sector employment in the world's largest economy was unchanged in February, while the government added 21,000 workers. Expectations had been for a rise of 125,000.
There was some sell-off in General Motors at the long end of the credit curve, but spreads soon began to recover, traders said. Auto bonds are among the most widely held securities in the European market.
The US report also showed job creation in December and January was weaker than previously thought.
The department revised lower its count of jobs gains in January to 97,000 from 112,000 and for December to just 8,000 from 16,000.
February's US unemployment rate held steady at 5.6 percent, as people dropping out of the labour force offset the impact of plummeting employment as measured by a separate survey of households.
British retailer Marks & Spencer Plc plans to sell a 400 million pounds 10-year bond in the coming days at a spread of gilts plus 93-95 basis points, a market source said on Friday. HSBC and Morgan Stanley are lead managing the sale.
The company said earlier this week it would use the proceeds of the issue to inject funds into its UK pension scheme. The bond is likely to launch early next week.
Marks & Spencer, Britain's biggest clothes retailer, is rated A3 by Moody's Investors Service and A by Standard & Poor's.
S&P said this week that its ratings and stable outlook on Marks & Spencer were unaffected by the news of the bond issue.
Marks & Spencer said on Monday it would adopt new UK standards for accounting for pension liabilities for the financial year to April 3, 2004. It estimated the profit and loss pre-tax charge this year at 134 million pounds.
Ireland-based product packaging company Clondalkin Group sold a 170 million euro high-yield bond on Friday, Deutsche Bank, one of the lead managers, said.