US high-grade corporate bonds were unchanged overall on Friday while bonds of General Motors rose slightly after its chief executive said the company is seeing ample interest in the sale of its finance unit.
General Motors CEO Rick Wagoner said late on Thursday that the auction of General Motors Acceptance Corp is progressing, relieving worries that a recent rating downgrade could dampen interest in the unit. GMAC's 8.375 percent bonds due in 2033 rose to 70 cents on the dollar from 69.75 cents on Thursday, according to MarketAxess.
"I think there will be some kind of deal where GM monazites a majority of its interest in GMAC and that will create a lot of value for existing GMAC bondholders," said David Feinman, portfolio manager for Havens Advisors, a New York hedge fund.
GM said in October it wanted to sell a controlling stake in GMAC to restore the finance unit's investment-grade ratings, but several large banks that were believed to be potential bidders have said they are not interested in the unit.
In the primary market, issuance for the week totalled nearly $14 billion, with about $6 billion of that in the high-yield market, as companies rushed to complete financings before the year-end slowdown.
Supply is expected to be very light until the first quarter of next year, when high-grade issuers are expected to complete a record amount of refinancings, according to Lehman Brothers.
The supply probably will not pressure spreads wider because there is still plentiful cash in the market, Lehman Brothers co-head of global finance Jeff Weiss said at a press briefing on Friday.
Spreads could widen slightly over the course of next year, however, as mergers and acquisitions increase and companies add leverage to their balance sheets, he said.
"The reasons that make us relatively positive about the markets overall are that there is so much liquidity in the market and balance sheets really are significantly better," Weiss said. In other markets, prices of benchmark 10-year Treasuries rose 4/32, yielding 4.44 percent, on hopes that the Federal Reserve's campaign of interest rate hikes will end soon. A statement from the Federal Open Market Committee on Tuesday suggested that rates have reached a neutral level that neither supports nor hinders economic growth.