US corporate bond spreads were unchanged on Friday and trading was light as a dearth of economic news left the market without direction.
"Volumes are about 40 percent of normal," said one corporate bond trader. "This is the first Friday in two or three weeks that we haven't had a big economic number, so I think people are using this as an excuse to do nothing."
Spreads, the yield gap between corporate bonds and US Treasuries, were unchanged after drifting slightly tighter for the week, traders said.
Largely range-bound since mid-May, corporate bonds got a slight boost in early June when a benign jobs report reassured investors that the Federal Reserve will move gradually when it begins to raise interest rates.
"A more aggressive Fed was built into the market," said the corporate bond trader. "To the extent that the jobs number makes people feel they're not going to be that aggressive, that brought some liquidity back."
Bonds of Tenet Healthcare Corp rose after its upsized $1 billion bond sale earlier this week. The sale, increased from an original $500 million, gives Tenet an improved cash position and more time to repay debt, said fixed-income research service Gimme Credit.
"Tenet is shadowed by government investigations related to billing practices and Medicare payments, but the company is now better positioned to withstand the potential blow of a large settlement," Gimme Credit said in a report on Friday.
Tenet's 6.375 percent notes due 2011 traded at 86.5 cents on the dollar, up from 85.375 cents on Thursday, according to MarketAxess.
Bonds of UAL Corp's United Airlines fell about 2 cents to about 8 cents on the dollar, traders said, after the airline lost its bid for a $1.6 billion federal loan guarantee to help it emerge from bankruptcy.
"It's not that actively traded because it's a late-stage bankruptcy, but it's weaker," said Harold Rivkin, president H. Rivkin & Co, a distressed debt firm.
The cost of insuring investment-grade credits against default in the credit derivatives market, as measured by the Dow Jones CDX.NA.IG 2, was unchanged at 0.62 percentage point.
Benchmark 10-year Treasury notes fell 6/32, yielding 4.71 percent, as traders repositioned ahead of the Federal Reserve policy-setting meeting at the end of June.
Comments
Comments are closed.