US corporate bonds spread steady

US corporate bonds were steady in trading on Friday as bonds of Sallie Mae weakened after The New York Times reported that the largest US student-loan company was in leveraged buyout talks with private equity firms.
A private equity deal would be notable because any buyout would likely add a greater debt burden to the financial company, creating higher risk for bond investors who may want to hold Sallie Mae debt. Sallie Mae declined to comment.
"If accurate, this would be significant because many LBO screens exclude financial issuers due to fundamental constraints," Barclays Capital said in a report on Friday.
Spreads for Sallie Mae's 5.375 percent notes due in May 2014 widened to 115 basis points, from 90 basis points on April 10, according to MarketAxess. The cost of protecting $10 million of Sallie Mae's debt against default rose to $70,500 a year, from $36,500 on Thursday, according to Barclays Capital.
High-grade bond spreads traded between 93 and 94 basis points this week, while junk bond spreads also stayed within a range of 275 to 278 basis points this week, according to Merrill Lynch & Co data.
Bonds of Dow Chemical Co, the largest US chemical company, continued to weaken after the company fired a top executive and a board member on Thursday, accusing them of engaging in unauthorised discussions to sell the company.
The two men, Romeo Kreinberg, head of Dow's performance plastics operations, and Pedro Reinhard, a senior adviser and member of the board, were accused of engaging in a "business activity that was highly inappropriate," according to a statement from Dow.
Kreinberg couldn't be reached to comment and Reinhard denied the allegation. Spreads for Dow Chemical's 7.375 percent notes due in 2029 widened to 174 basis points on Friday from 163 basis points on Thursday, according to MarketAxess.
Standard & Poor's said on Friday that the firing of radio host Don Imus by CBS Corp had no immediate impact on debt ratings of the company or its subsidiaries.
The dismissal of the popular radio host on Thursday comes at a challenging time for CBS Radio, which was already feeling the effects of the exit of on-air personality Howard Stern in January 2006, the ratings agency said in a statement. CBS is rated "BBB," S&P's second-lowest investment-grade rating.