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US Corp Bonds-Autos continue to lock in gains

By Richard A. Bravo

NEW YORK, Nov 13 (Reuters) - Yield margins in the high-grade U.S. corporate bond market generally ended the day unchanged, although spreads in the auto sector remained volatile on the heels of a rating action from Standard & Poor's.

After ratings agency S&P put Ford Motor Co.'s ratings on CreditWatch with negative implications on Oct. 21, yield margins on the auto giant's debt widened out as much as 80 basis points, on the fear that the company could retain a negative outlook.

But after S&P announced on Wednesday that they would cut Ford's rating to BBB-minus but give the company a stable outlook, the bonds rallied and are now trading tighter than where they were before the original CreditWatch announcement last month.

Ford Motor Credit Co.'s 7.00 percent paper due 2013 was recently quoted at 247 basis points over Treasuries, according to MarketAxess, 17 basis points tighter on the day.

"If we were to look back on this incident, this is going to be a blip," said Jeffrey Rosenberg, head of credit strategy at Banc of America Securities. "When S&P came out with the review the market was surprised, when they came out with a stable outlook, the market moved back. If you held the bonds it didn't matter but it caused a lot of angst and concern."

Elsewhere in the market, over $2 billion was priced in the primary sector, with Banc of America selling an upsized $1.7 billion of two-part debt through the company's underwriting unit.

The issue included a seven-year senior portion, rated 'Aa2' by Moody's Investors Service, 'A+' by Standard & Poor's and 'AA' by Fitch Ratings, that priced at 72 basis points over Treasuries. The transaction also included a 12-year subordinate portion, rated 'Aa3' by Moody's, 'A' by S&P and 'AA-' by Fitch, which priced at 108 basis points over Treasuries.

In other markets, U.S. Treasury prices rallied after a sale of 10-year notes garnered strong demand. The 10-year benchmark note was recently quoted up 31/32 to yield 4.276 percent.

To see upcoming and recent corporate bond sales, click on [nNEUBD4].