CREDIT MARKETS: Lackluster Housing Data Further Helps Bonds

(Dow Jones)--High-grade corporate bonds were given a fresh boost Tuesday as weaker-than expected U.S. housing sales data sent investors flocking to safe-haven assets and caused Treasurys to rally tighter.

The CDX North American Investment Grade Index deteriorated more than 3% from Monday night's levels to trade at 112.51 basis points after the data. Home sales dropped 27.2% for July, twice what was expected.

There were two decent-sized high-grade-bond deals in the primary market, and no high yield deals. In secondary trading, Citigroup's 5.375% bonds due Aug. 9, 2020, were most active, trading 14 basis points wider on the day according to MarketAxess figures, after news reports suggested overdue loans at the firm's consumer lending business are higher than what the firm has been forecasting.

Investment Grade

The rally in Treasurys and demand for strong corporate bonds helped Yum Brands, Inc. score the lowest coupon and yield on record for 10-year debt issued by a BBB-minus rated company.

The Louisville, Ky., restaurant company, which owns Kentucky Fried Chicken, Pizza Hut, Taco Bell and Long John Silver's, sold $350 million in bonds maturing Nov. 1, 2020, upsized from an original offering of $300 million. (more)