Morning Commentary: Apple stable ahead of offering; AT&T unchanged in early trading

By Cristal Cody

Tupelo, Miss., May 6 – Apple Inc.’s 2.5% notes due 2025 were unchanged early Wednesday but weaker than issuance ahead of the company’s planned seven-part benchmark offering of senior notes set to price later in the session.

AT&T Inc.’s 3.4% notes due 2025 brought in April traded flat in the secondary market.

“The deluge of supply is likely to continue as May is often a busy month of issuance as companies are eager to issue debt once earnings blackouts lift and before the investor base scatters for the summer,” RBC Capital Markets, LLC analysts said in a note on Wednesday.

“The impact of significant supply has also broken the traditional inverse relationship between credit spreads and rates. Credit spreads have widened in recent weeks as interest rates have moved higher.”

The Markit CDX North American Investment Grade series 23 index eased 1 basis point to a spread of 64 bps on Tuesday.

The three-month Libor yield was unchanged at 28 bps early Wednesday.

Apple steady

Apple’s 2.5% notes due 2025 were flat at 93 bps bid in secondary trading, according to a market source.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at a spread of Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

AT&T unchanged

AT&T’s 3.4% notes due 2025 traded unchanged at 147 bps offered, a market source said.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

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