*

U.S. corporate bond market quiets on tariff war, Treasury

market

volatility

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Bond spreads widen most in week after tariffs since first

week

of March 2023 regional bank stress

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Five to six companies stay on sidelines after volatility,

syndicate banker says

(Updates with market commentary and Treasury auction results)

By Matt Tracy

April 9 (Reuters) - U.S. corporate bond market issuances

have dried up after opening for just one bond offering on

Tuesday, as spreads in the week after President Donald Trump's

sweeping tariffs widened the most since the 2023 regional

banking crisis.

Since Trump's tariff announcements exactly one week ago on

April 2, corporate bond spreads, or the cost to borrow, have

widened to their highest levels in nearly two years.

Both investment-grade and junk bond spreads have seen the

most one-week widening since the regional banking stress in

March 2023 that resulted in the collapse of Silicon Valley Bank

and other banks, according to Dan Krieter, director of fixed

income strategy at BMO Capital Markets.

The bond market's first new deal in three days occurred on

Tuesday, a $4.2 billion, three-part transaction from human

resources provider Paychex ( PAYX ). It was the first deal since

Swiss cement maker Holcim's four-part, $3.4 billion

issuance on April 2.

High-grade bond spreads tightened 2 basis points on Tuesday

and last sat at 118 bps as of market close, according to the ICE

BofA indexes. Junk bond spreads were 4 bps

tighter at 457 bps.

But both the high-grade and junk bond spreads may have

widened again on Wednesday morning, driven in part by early

morning U.S. Treasury market volatility, as Chinese and other

Asian funds offloaded Treasuries in high volumes.

One senior syndicate banker said Paychex's ( PAYX ) bonds were

trading a couple of basis points tighter at the start of the day

but then were quoting 3-4 bps wider by midday.

Benchmark 10-year U.S. Treasury note yields

jumped to a seven-week high 4.515% on Wednesday.

"Risk sentiment is once again sharply lower this morning,

likely keeping any borrowers on the sidelines as issuers

continue to wait for any semblance of calm that remains

elusive," said Krieter.

Some five to six investment-grade companies were looking to

issue early in the day, but decided to stay on the sidelines

seeing the volatility, according to the syndicate banker.

There were few signs of panic among investors in

lower-risk debt securities.

"I don't think that anyone can say with any confidence

how this is going to play out," said Natalie Trevithick, head of

IG strategy at Los Angeles-based investment management firm

Payden & Rygel.

"But it feels like the spread widening has finally

caught up with the equity rally we saw earlier, and I'd say we

might get a little bit of stabilization...On a positive note,

there is a lot of money sitting on the sidelines."

A closely-watched Treasury auction of $39 billion in 10-year

notes came in within market expectations on Wednesday. They

priced at a high yield of 4.435% that was lower than forecasts

and suggests strong investor demand.