Morning Commentary: Owens Corning, CPPIB, Cades to tap bond market; AT&T, Time Warner active

By Cristal Cody

Tupelo, Miss., Jan. 23 – Deal action is expected to ramp up in the high-grade bond market on Tuesday with several issuers in the pipeline.

Owens Corning intends to price senior notes (/BBB/BBB-). The offering is expected to include $400 million of 30-year notes, according to Fitch Ratings and S&P Global Ratings.

CPPIB Capital Inc. is marketing a benchmark-sized offering of U.S. dollar-denominated notes due Jan. 29, 2021 talked to price at mid-swaps plus 9 basis points, a source said.

Also on Tuesday, Caisse d'Amortissement de la Dette Sociale is expected to price a benchmark-sized offering of notes due Jan. 29, 2021. The notes were initially talked to price in the mid-swaps plus 14 bps area, according to a source.

Otherwise, market activity was fairly quiet over the morning after the U.S. federal government reopened on Tuesday following the weekend shutdown, a source said.

Bond supply is expected to be lighter this week compared to the previous week of heavy bank and financial issuance. About $20 billion to $25 billion of volume is predicted, according to market sources.

AT&T, Time Warner trade

In the secondary market, $17.87 billion of high-grade bonds were traded on Monday, Trace reported.

Early Tuesday, AT&T Inc.’s bonds (Baa1/BBB+/A-) traded heavily, a source said.

AT&T is fighting to salvage its $85.4 billion cash and stock acquisition of Time Warner Inc. that was first scheduled to close before the end of 2017 but was delayed in November after the Justice Department filed a federal lawsuit to stop the merger. A trial is set for March 19.

In a hearing on Monday, the Justice Department was ordered to gain permission to release competitors’ pricing data to AT&T and Time Warner.

AT&T’s 3.9% notes due Aug. 14, 2027 were last quoted trading better at 99.98 from 99.85 on Monday.

The Dallas-based telecommunications company sold $5 billion of the notes on July 27, 2017 at 99.827 to yield 3.92% and a spread of 160 bps over Treasuries.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) softened over the morning to 93.23 from where the notes went out on Monday at 94.43, a source said.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of Treasuries plus 135 bps.

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