Spreads in the US corporate bond market were a touch weaker on Friday under the pressure of a glut of new supply, while prices on General Motors Corp's bonds crept up in the high-yield market.
"Spreads do feel a little weak at the end of today so it supply is definitely having some impact," said David Bowser, portfolio manager at Standish Mellon Asset Management in Boston. However, there is still enough demand to help the market absorb the new issuance, Bowser said.
Embarq, the local telephone business being spun off from Sprint Nextel, sold $4.485 billion of debt on Friday in the week's largest deal.
The corporate bond market has absorbed well over $20 billion of new issuance this week, almost $8 billion of which priced on Friday.
So far this year, nearly 66 percent of new issuance has been from the financial sector, so there is a lot of interest in names coming from the industrial sector, a corporate strategist said.
In the auto sector, prices of General Motors Corp bonds were up slightly on Friday, continuing an improving trend from the past few sessions. The automaker's bonds got a boost after May 8, when it revised its first-quarter results to exclude a charge, changing the quarterly results to show a profit.
"That was just an accounting entry, but nevertheless, there was a feel-good factor about it," said Nasri Toutoungi, managing direct at Hartford Investment Management in Hartford, Connecticut.
GM's 8.375 percent bond due 2033 rose a half cent to about 76.25 cents on the dollar, according to MarketAxess.
GM is in talks with bankrupt Delphi Corp, a key supplier, and its unions, attempting to reach a deal to cut wages and jobs without a protracted strike at the supplier. Analysts have said a strike at Delphi could cripple production at GM and force it to burn through billions of dollars a week.
Analysts who talked earlier this week with GM's chief financial officer said the executive expects a deal to be reached within one to two months.
"You're going to see quite a bit of noise surrounding the Delphi situation, but we think it will get resolved, which will be beneficial to General Motors," Toutoungi said.
Delphi's 6.5 percent note due 2009 rose by 1.25 cents to 80.25 cents on the dollar, according to MarketAxess.