Midday Commentary: Spreads unchanged; DirecTV remains tight; AT&T lower; Verizon firms

By Cristal Cody

Tupelo, Miss., May 20 - The investment-grade bond market prepared for another active day of issuance with deals expected to price later in the session from companies including Macy's, Inc. and Time Warner Inc., according to sources.

High-grade bond spreads remained flat over the morning session, a source said.

The Markit CDX North American Investment Grade series 22 index was unchanged on Monday at a spread of 65 basis points.

DirecTV Holdings LLC's 4.45% notes due 2024 were mostly unchanged after tightening 15 bps to 20 bps on Monday following AT&T Inc.'s announcement it will acquire the satellite TV provider, according to market sources.

AT&T's 3.9% notes due 2024 traded lower early Tuesday, according to a market source.

Verizon Communications Inc.'s bonds (Baa1/BBB+/A-) tightened and are among the most active investment-grade issues following AT&T's deal announcement, according to a market source.

DirecTV holds tight

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) were quoted at 120 bps bid early Tuesday, a market source said.

The notes traded late Monday at 117 bps offered, in from the 132 bps offered area on Friday.

In the morning session, the notes traded slightly lower at 105.39 from 105.64 on Monday, according to a market source.

DirecTV Holdings and DirecTV Financing Co. sold $1.25 billion of the notes on March 17 at 99.63 to yield 4.496%, or a spread of Treasuries plus 180 bps.

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

AT&T lower

AT&T's 3.9% notes due 2024 (A3/A-/A) dropped to 103.21 early Tuesday from 103.56 on Monday, according to a market source.

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

The telecommunications company is based in Dallas.

Verizon firms

Verizon's 6.55% bonds due 2043 firmed 2 bps to 151 bps offered, a source said early Tuesday.

The bonds rose slightly to 125.83 in midday trading from 125.70 on Monday, according to a market source.

Verizon sold $15 billion of the bonds at 99.883 to yield 6.559%, or Treasuries plus 265 bps, on Sept. 11.

The telecommunications company is based in New York City.

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