Morning Commentary: AT&T gives more details on record-making notes offering; market spreads steady

By Sheri Kasprzak and Stephanie N. Rotondo

New York, April 24 – Additional details emerged Friday morning on AT&T Inc.’s massive $17.5 billion global notes offering – the third-largest investment-grade offering of all time.

The notes (Baa1/BBB+/A-) included $3 billion of five-year notes at Treasuries plus 110 basis points, $750 million of five-year floating-rate notes, $2.75 billion of seven-year notes at Treasuries plus 130 bps, $5 billion of 10-year notes at Treasuries plus 150 bps, $2.5 billion of 20-year notes at Treasuries plus 190 bps, $3.5 billion of 31-year notes at Treasuries plus 215 bps.

The 2020 fixed-rate notes are callable at par beginning May 30, 2020. The 2022 notes are callable at par beginning April 30, 2020, and the 2025 bonds are callable at par beginning Feb. 15, 2025. The 2035 bonds are callable at par beginning Nov. 15, 2034, and the 2046 bonds are callable at par beginning Nov. 15, 2045.

Each of the fixed-rate tranches also features a make-whole call prior to the par call dates.

A trader said the new notes were in focus in early Friday trading, with the five-year paper making up most of the action.

As for the other issues, the trader quoted the 10-year notes at 142 bps bid, 139 bps offered. The 20-year paper was pegged at 185 bps bid, 182 bps offered, while the 30-year bonds were at 205 bps bid, 202 bps offered.

The joint bookrunners for the deal were BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

Proceeds will be used for general corporate purposes, including cash considerations for previously announced acquisitions.

Aside from the new AT&T deal, a trader said the market was “pretty quiet,” adding that a “Treasury rally is not helping.”

Treasuries were up after data on durable goods orders in March indicated that there was continued weakness in business investment spending.

The Markit CDX North American Investment Grade series 23 index was steady at a spread of 61 bps.

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