By Rom Badilla and Maulik Mody
Corporate bonds were mostly flat Thursday, as seen by the iTB high grade Corporate Bond indices. Good earnings in the energy and finance sector and poor revenues by utilities and consumer companies fuelled the bonds today.
iTB CBI 1-5
The iTB CBI 1-5Yr gained one-tenth of a percentage to end at 1075.18. The average yield fell by 4 basis points to 2.73%. Spreads to Treasuries tightened by a basis point to 1.72%. Spread is the difference between the yield of a bond and the yield of a Treasury having the same time to maturity as the bond.
The best performer of the day was Zion’s 7.75% bond maturing September 2014. The price of the bond appreciated 46 cents to the par, last trading at 103.00, as yields fell by 13 basis points. The spread to Treasuries having comparable maturities tightened 8 basis points to 5.57%. The loser of the day was BP’s 5.25% bonds maturing November 2013, as the bond sold off under pressure of the strong earnings posted by Exxon Mobil and a few other energy firms. The bond last traded at 100.97, down 12 cents from yesterday, causing yields to rise by 4 basis points to 4.92%. The spread to Treasuries widened by 8 basis points to 3.89% as the bond underperformed government securities.
iTB CBI- 5+
The iTB high grade corporate bond 5+ index made a shy gain to close at 1121.86, up from 1121.50 yesterday. The average yields was flat at 4.33% but the spread to Treasuries with comparable maturities widened by a basis point to 1.60% as it was outperformed by the low risk government bonds.
The winner of the day was ArcelorMittal’s (MT) 9.85% bonds maturing June 2019. The bond last traded at 128.45, appreciating 40 cents to the par. The yields fell 5 basis points to 5.70%, as spreads to comparable maturities narrowed 3 basis points to 3.04%. The worst performer of the day was Citigroup’s (C) 8.5% bonds maturing May 2019, for a second time in a row. The yield on it increased 2 basis points to 5.41%, trading last at 121.44, down 16 cents from yesterday. The spread to Treasuries widened 3 basis points to 2.71%.