Midday Commentary: Investment-grade bond spreads stable; DirecTV firms; AT&T eases

By Cristal Cody

Tupelo, Miss., May 21 - Primary action in the investment-grade bond market appeared set early Wednesday to cool ahead of the early market close on Friday and three-day holiday weekend, according to market sources.

A handful of high-grade deals are expected to price on Wednesday following more than $20 billion of issuance brought in the previous two sessions, according to sources.

Investment-grade bond spreads were unchanged over the morning after weakening on Tuesday, according to a market source.

The Markit CDX North American Investment Grade series 22 index ended 1 basis point wider at a spread of 66 bps on Tuesday.

In the secondary market, DirecTV Holdings LLC's 4.45% notes due 2024 traded about 2 bps tighter, a source said.

The company's bonds have firmed as much as 20 bps since Friday following AT&T Inc.'s announcement that it will acquire the satellite TV provider in a cash and stock deal valued at about $48.5 billion, according to market sources.

AT&T's 3.9% notes due 2024 eased 2 bps in early trading, a source said.

DirecTV firms

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) traded 2 bps tighter from early Tuesday at 118 bps bid, a source said.

The notes climbed to 106.08 on Tuesday and traded lower at 105.70 in midday trading, according to a market source.

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

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

AT&T eases

AT&T's 3.9% notes due 2024 (A3/A-/A) eased 2 bps to 97 bps offered, according to a market source.

The notes were flat at 103.39 in midday trading on Wednesday, a source said.

AT&T sold $1 billion of the 10-year notes on March 5 at 99.696 to yield 3.937%, or Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

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