BNY Mellon brings deal; DirecTV, AT&T notes stronger on deal talk; funds lose $73 million

By Cristal Cody and Aleesia Forni

Virginia Beach, May 2 - Bank of New York Mellon Corp. came to the primary market on Friday, taking advantage of the strong momentum in the high-grade primary market.

The financial services company sold $1.25 billion of notes in tranches due 2019 and 2024, a market source said.

A $750 million tranche of 2.2% five-year notes priced with a spread of Treasuries plus 57 basis points, and a $500 million tranche of 3.4% 10-year notes sold at Treasuries plus 82 bps.

Both tranches sold at the tight end of talk, which was set in the area of 60 bps over Treasuries for the five-year notes and at 85 bps over Treasuries for the 10-year notes.

The high-grade primary market saw roughly $19 billion of paper price this week, coming in at the high end of earlier predictions.

"Conditions are still constructive, but you are seeing some signs of [investor] fatigue recently," a market source said on Friday.

For the week ended April 30, investment-grade bond funds saw $73 million of outflows, according to Lipper, the first outflows seen since October 2013.

This compares to last week's inflow of $1.47 billion.

Year-to-date total inflows for investment-grade bond funds sit at roughly $33 billion.

Investment-grade bond spreads stayed mostly flat over the session on Friday following a better-than-expected April jobs report, according to market sources.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 64 bps.

The Labor Department reported that total non-farm payroll employment rose by 288,000 in April, higher than the 215,000 forecast.

In the secondary market, the 4.45% senior notes due 2024 that DirecTV Holdings LLC and DirecTV Financing Co. priced in March ended the week up 2 points following media reports that AT&T Inc. has made acquisition overtures, according to a market source.

AT&T's 3.9% senior notes due 2024 climbed higher on the week, a market source said.

BNY prices tight

BNY Mellon priced $1.25 billion of senior notes in five- and 10-year tranches on Friday, according to a market source.

The sale included $750 million of 2.2% notes due 2019 priced with a spread of Treasuries plus 57 bps, or 99.806, to yield 2.241%.

There was also $500 million of 3.4% 10-year notes sold at 99.949 to yield 3.406%.

The notes sold at Treasuries plus 82 bps.

Both tranches sold at the tight end of talk.

BNY Mellon is a New York-based financial services company.

DirecTV rises

DirecTV's 4.45% notes due 2024 climbed to 103.33 on Friday from 101.32 on Monday, according to a market source.

DirecTV sold $1.25 billion of the 10-year notes (Baa2/BBB/) on March 17 at 99.63 to yield 4.496%.

The digital entertainment company is based in El Segundo, Calif.

AT&T rises

AT&T's 3.9% notes due 2024 headed out better at 101.98 from where the notes traded at the start of the week at 100.81, according to a market source.

The notes saw a high of 102.74 on Tuesday.

AT&T sold $1 billion of the 10-year notes (A3/A- /A) on March 5 at 99.696 to yield 3.937%.

The telecommunications company is based in Dallas.

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