Midday Commentary: Investment-grade bonds ease in heavy early trading; telecom sector active

By Cristal Cody

Tupelo, Miss., Oct. 2 - Investment-grade bonds widened in heavy trading early Wednesday on the second day of a partial U.S. government shutdown, according to traders.

"In the middle of a lot right now," one trader said.

Another trader was "super busy."

"Yesterday, financial markets mostly shrugged off the turmoil in Washington, but today, worries are weighing on the markets," Confluence Investment Management LLC strategists said in a note on Wednesday.

Market sources note that with the government partially closed, the Department of Labor will not release the widely anticipated September employment data on Friday.

In the high-grade secondary market, telecommunications bonds were among the most actively traded late Tuesday and remained active early Wednesday, sources said.

Bonds from Verizon Communication Inc. and AT&T Inc. "are both a little wider today, just a basis point or two," a trader said.

Verizon's long bonds were the exception and tightened about 3 bps from Tuesday's market.

Verizon mixed

Verizon's 3.65% notes due 2018 traded early Wednesday "a little bit wider" at 106 bps bid, 103 bps offered, a trader said. Verizon sold $4.75 billion of the five-year notes with a spread of 190 bps over Treasuries as part of its $49 billion eight-tranche deal (Baa1/BBB+/A-) priced on Sept. 11.

On the long end of Verizon's record offering, the company's 6.55% bonds due 2043 firmed to 190 bps bid, 187 bps offered early Wednesday from where the bonds traded flat on Tuesday at 193 bps bid, 190 bps offered.

Verizon sold $15 billion of the 30-year bonds with a spread of Treasuries plus 265 bps.

The telecommunications company is based in New York City.

AT&T flat to wider

AT&T's bonds traded flat to slightly weaker in the morning session, a trader said.

The company's 4.3% global notes due 2042 (A3/A-/A) were unchanged from Tuesday at 172 bps bid, 167 bps offered.

AT&T is a Dallas-based communications company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.