J&J Debt Trades Down After Single Shot COVID-19 Vaccine Pause

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Johnson & Johnson’s corporate bonds were trading lower across the board on Tuesday, after two leading U.S. health agencies recommended a pause in its one-shot COVID-19 vaccine after six women who received the injection developed blood clots. While the sell was most pronounced in JNJ JNJ, -1.35% in bonds maturing in 20 to 40 years, the downward pressure was also evident in its shorter five-year debt, according to data from BondCliq, a platform which tracks corporate bond trading activity.

This chart shows that JNJ’s 2.25% more active bonds due September 2050 were suffering the brunt of the sale, with a roughly 5.4% drop in trading Tuesday afternoon.

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JNJ bonds under pressure BondCliq

The White House said Tuesday that the JNJ hiatus will not have a significant impact on its vaccination plan, in part because the Biden administration already has enough alternative doses to vaccinate 300 million Americans. Read: Johnson & Johnson Vaccine Pause: What To Know If You Received Or Scheduled The Vaccine “I think it’s probably a little too early to draw a firm conclusion,” said Brian Kloss, portfolio manager at Brandywine Global, on whether the JNJ’s hiatus could hamper the broader US COVID-19 vaccination push “The question we have to ask ourselves is, does this mean something similar for Pfizer or Moderna?” About 37% of the US population has received at least one dose of the COVID-19 vaccine, according to government data. The White House said that less than 5% received the JNJ vaccine in a single injection, while the rest received doses of two injections developed by Pfizer Inc. PFE, + 0.48% and the German partner BioNTech SE BNTX, + 6.21% or of Moderna Inc. MRNA, + 7.01%, which received emergency use authorization before Johnson & Johnson. The Food and Drug Administration and the Centers for Disease Control and Prevention recommended pausing JNJ injections on Tuesday after six cases of blood clotting were reported in women, all ages 18 to 48, approximately 6.8 million people who received this vaccine. One of Wall Street‘s main concerns has been that any delay in vaccinating strips in the United States could hamper the economic rebound from the pandemic. The shares were mixed on Tuesday, with the Dow Jones Industrial Average DJIA, -0.14% off about 0.1%, but still trading just shy of last week’s all-time highs. Shares of iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, + 0.35% were up 0.4%, according to FactSet. “Valuations are definitely trading, on a margin basis, toward historical values,” Kloss said of investment grade US corporate bonds, which are priced above TMUBMUSD10Y risk-free Treasury rates, 1.623%. “One could call them ‘rich’ and they don’t offer a significant margin of error.” On the other hand, any kind of setback in the so-called reopening of trade will likely meet with increased support from the Federal Reserve or Congress in the form of additional stimulus, he said. “I honestly don’t think it will derail the recovery,” Patrick Leary, Incapital’s chief operating officer, said of the JNJ hiatus. “As long as it raises questions about vaccines among people, that’s the concern.” Johnson & Johnson and Microsoft Corp. MSFT, + 0.93% have the rare distinction of being the only two US corporations left with top AAA ratings, pointing to a low probability of default by either company. That also means that any volatility in spreads will likely remain fairly subdued. JNJ said in a statement that it is “working closely with medical experts and health authorities.” The company also said it would “proactively delay the launch of our vaccine in Europe,” following its mid-March authorization for use in the region. There was no immediate response for this article. The FDA granted emergency authorization to J&J for the use of its single-use COVID-19 vaccine on February 27. Read: Here’s why the bond market shrugged off a surge in US inflation.