Midday Commentary: High-grade bond spreads widen; DirecTV loses ground; AT&T edges up

By Cristal Cody

Tupelo, Miss., May 15 - Investment-grade bond spreads remained soft Thursday morning after they eased on Wednesday, according to a market source.

About $33 billion of high-grade bonds have priced this week and the supply is weighing on spreads, according to market sources.

The Markit CDX North American Investment Grade series 22 index closed 1 basis point wider at a spread of 63 bps on Wednesday.

"Credit spreads have edged 1-2 bps wider over the last 48 hours, but that move is minimal in the context of the 12-13 bps rally in government bond yields that has occurred over the same time period and cash prices on most corporate bonds are much higher," RBC Capital Markets, LLC analysts said in a note on Thursday.

DirecTV Holdings LLC's 4.45% notes due 2024 lost some of the ground they gained in Wednesday's session in early trading on Thursday, according to a market source.

Bonds from AT&T Inc., which is reported to be in advanced discussions to acquire the satellite TV provider, edged higher.

DirecTV falls

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) dropped to 104.48 in early trading on Thursday, according to a market source.

The notes headed out on Wednesday at 106.63.

DirecTV Holdings and co-issuer DirecTV Financing Co. sold $1.25 billion of the 10-year notes on March 17 at 99.63 to yield 4.496%.

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

AT&T edges up

AT&T's 3.9% notes due 2024 (A3/A-/A) rose to 102.52 by midday trading, according to a market source.

The notes traded late Wednesday at 102.18.

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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