Midday Commentary: Credit spreads flat; Verizon, Vodafone trade wider; Viacom tightens

By Cristal Cody

Tupelo, Miss., Aug. 30 - Investment-grade bond spreads opened Friday mostly flat, while the telecom sector continued to see activity following Thursday's reports that Verizon Communications Inc. is in talks to purchase Vodafone Group plc's 45% stake in Verizon Wireless, market sources said.

The Markit CDX Series 20 North American Investment Grade index tightened 1 basis point on Thursday.

"Credit spreads are unchanged this morning after a choppy week that has seen spreads push 4-5 bps wider," according to RBC Capital Markets, LLC analysts on Friday.

Verizon's bonds widened 15 bps in secondary trading on Thursday on the buyout reports, traders said.

In the secondary market early Friday, Verizon's 2.45% notes due 2022 (A3/A-/A) traded at 128 bps bid, 122 bps offered, a trader said.

New York City-based Verizon sold $1.75 billion of the notes in November at a spread of Treasuries plus 75 bps.

London-based Vodafone's 2.95% notes due 2023 (A3/A-/A-) traded in Friday's morning session at 140 bps bid, 130 bps offered. The telecommunications company priced $1.6 billion of the notes on Feb. 11 at a spread of Treasuries plus 105 bps.

Viacom Inc.'s bonds sold earlier in August continued to trade better Friday morning, according to a trader.

Viacom firms

Viacom's 4.25% notes due 2023 (Baa2/BBB/BBB) were seen early Friday at 163 bps offered, a trader said.

The notes went out on Thursday at 168 bps bid, 165 bps offered.

The New York City-based media entertainment company sold $1.25 billion of the notes at a spread of Treasuries plus 178 bps on Aug. 12.

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