Morning Commentary: Investment-grade market action thins; AT&T softens; Time Warner improves

By Cristal Cody

Tupelo, Miss., Aug. 30 – Little action was seen over the morning in the high-grade bond market, according to sources.

The deal pipeline was quiet with no reported issuers marketing bonds early Wednesday.

Activity is expected to remain thin until after the long holiday weekend.

AT&T, Time Warner active

In the secondary market, AT&T Inc.’s notes (Baa1/BBB+/A-) were trading heavily at the start of the session, a source said.

The company plans to acquire Time Warner Inc. in an $85.4 billion cash and stock deal expected to close before the end of the year.

AT&T’s 3.9% notes due Aug. 14, 2027 were seen at 100.86 in early secondary trading, down from 102.08 on Tuesday.

The company sold $5 billion of the notes on July 27 at 99.827 to yield 3.92% and a spread of 160 basis points over Treasuries.

AT&T’s 4.25% notes due March 1, 2027 traded mid-morning at 103.65, a source said. The notes went out in the previous session at 104.82.

The Dallas-based telecommunications company sold $2 billion of the notes on Jan. 31, 2017 at 99.94 to yield 4.26% and a spread of Treasuries plus 180 bps.

Time Warner’s 2.95% notes due 2026 traded up to 96.69 early in the day from 95.41 on Tuesday in light secondary trading, a source said.

Time Warner (Baa2/BBB/BBB+) sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of 135 bps over Treasuries.

The media and entertainment company is based in New York.

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