Morning Commentary: Investment-grade credit spreads open wider; AT&T tightens modestly

By Cristal Cody

Tupelo, Miss., Feb. 2 – Market volatility may keep primary action in the high-grade bond market at a standstill on Tuesday with no new supply announced over the morning, according to informed sources.

The Markit CDX North American Investment Grade 25 index opened 3 basis points wider at a spread of 107 bps.

In the secondary market, new bonds from AT&T Inc. (Baa1/BBB+/A-) that priced on Friday traded about 1 bp to 3 bps tighter.

The three-month Libor yield was unchanged at 61 bps on Tuesday.

On Monday, $15.4 billion of investment-grade issues were traded, compared to about $19.4 billion of bonds traded on Friday, according to Trace.

AT&T notes firm

AT&T’s 2.8% notes due 2021 traded about 3 bps better at 147 bps offered, according to a market source.

The company sold $1.25 billion of the five-year notes on Friday at a spread of 150 bps over Treasuries.

AT&T’s 4.125% notes due 2026 were quoted modestly tighter at 218 bps offered.

The notes priced in a $1.75 billion tranche in Friday’s sale at Treasuries plus 220 bps.

The company’s 5.65% bonds due 2047, which priced in a $1.5 billion offering on Friday at Treasuries plus 290 bps, firmed to 189 bps offered in the secondary market.

AT&T is a Dallas-based telecommunications company.

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