Midday Commentary: Investment-grade bonds, CDS spreads better; Time Warner Cable lower

By Cristal Cody

Tupelo, Miss., Feb. 12 - High-grade bonds and bank and brokerage credit default swaps costs remained better in the early hours of market activity on Wednesday, according to informed sources.

"Credit spreads are showing no signs of dismissing yesterday's rally, and CDS indices are right back where they were before the S&P 500 began its 5% correction in mid-January," RBC Capital Markets, LLC analysts said in a note. "CDS spreads have tightened quicker than cash bond spreads in this rally."

The Markit CDX North American Investment Grade series 21 index firmed 2 basis points to a spread of 66 bps on Tuesday.

In the secondary market, cable and telecommunications bonds continue to be active, according to market sources.

Time Warner Cable Inc.'s bonds opened the session weaker as Charter Communications Inc. pushes forward in its hostile takeover attempt, a market source said.

On Tuesday, Charter nominated 13 directors to Time Warner Cable's board. Time Warner Cable rejected Charter's offer in January of $132.50 a share for the company.

Time Warner Cable lower

Time Warner Cable's 4.125% senior notes due 2021 traded about a point lower at 95.50, according to a source on Wednesday.

Time Warner Cable (Baa2/BBB/BBB) sold $700 million of the 4.125% notes due 2021 on Nov. 9, 2010 at 99.369 to yield 4.202%.

The broadband communications company is based in New York City.

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