Seven deals out as bond market eyes debate

By Hillary Flynn

NEW YORK, Sept 26 (IFR) - Seven investment-grade borrowers hit the US bond market on Monday, jumping into a shaky market watching for clues to the future in tonight's first presidential debate.

The CBOE Market Volatility Index was up 1.5% early in the session - the VIX's biggest jump in nearly two weeks - as Donald Trump and Hillary Clinton prepared to square off.

Equities were down while in credit the CDX IG26 index was 1.25bp wider at 79.1bp, reflecting jitters about one of the most closely watched US elections in memory.

"The debate is front and center," said Sean Newman, senior portfolio manager at Invesco (Frankfurt: 3IW.F - news) .

But even amid the nerves, borrowers were finding a welcome reception from a buyside that still has plenty of cash to put to work.

Groceries giant Kroger (Baa1/BBB/BBB) was the standout offering of the day, a US$1.75bn three-part trade that tightened as much as 20bp from initial thoughts early in the session.

Kroger launched a US$500m 3-year at T+65bp, a US$750m 10-year at T+110bp and a US$500m 30-year at T+155bp.

Smaller trades such as a US$400m offering from Southwestern Electric Power (Baa2/BBB+), which launched at T+118bp or roughly 20bp tighter than initial thoughts, were also vying for buyside attention.

But participants on both sides said they were focused on the looming presidential election - and especially what a Trump victory could mean for the markets.

"I think that [a Trump win in the debate] is really going to cause a lot of investors to rethink how they want to be positioned over the next six weeks," one high-grade credit trader told IFR.

Meanwhile new issues sold last week looked to be slightly weaker in secondary trading.

"Bids are down a couple basis points, and many guys have dropped bids," one syndicate banker said.

Shire (Xetra: S7E.DE - news) 's new 10-year's spread widened 2bp from Friday but stayed within pricing levels at G+150bp, according to MarketAxess. (Reporting by Hillary Flynn; Editing by Paul Kilby and Marc Carnegie)