Midday Commentary: Investment-grade bond spreads ease; Nomura trades flat; AT&T firms

By Cristal Cody

Tupelo, Miss., March 14 - Market tone in the high-grade bond market remained poor early Friday after more than $40 billion of corporate supply priced over the week, according to informed sources.

The Markit CDX North American Investment Grade series 21 index widened 3 basis points on Thursday to a spread of 68 bps.

"CDS spreads have moved wider at a much quicker rate than cash spreads as investors look to the derivative market to protect portfolios," RBC Capital Markets, LLC analysts said in a morning note. "This is akin to investors buying put options to protect an equity portfolio rather than selling stocks and is typically the first response from corporate bond investors to volatility."

In the secondary market, Nomura Holdings Inc.'s 2.75% senior notes due 2019 traded flat to about 1 bp better from where the notes priced on Wednesday, according to a market source.

AT&T Inc.'s 3.9% notes due 2024 brought in the previous week opened the day stronger, a source said.

Nomura flat

Nomura's 2.75% senior notes due 2019 were quoted early Friday at 129 bps offered, according to a market source.

Nomura sold $1 billion of the series A notes (Baa3/BBB+/) on Wednesday at a spread of Treasuries plus 130 bps.

The financial holding company is based in Tokyo.

AT&T firms

AT&T's 3.9% notes due 2024 traded better at 121 bps offered on Friday morning, a source said.

The company priced $1 billion of the 10-year notes (A3/A- /A) on March 5 at a spread of Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

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