AT&T sells $4 billion; Arizona Public Service prices; Thomson Reuters notes firm; CDX softens

By Cristal Cody

Eureka Springs, Ark., May 3 – AT&T Inc. surprised the market with $4 billion of add-ons to five tranches of senior notes on Tuesday.

The final book size was more than $11 billion, a market source said.

Also in primary activity, Arizona Public Service Co. sold $350 million of 30-year notes.

Credit spreads widened over the day. The Markit CDX North American Investment Grade series 23 index closed 3 basis points weaker at a spread of 81 bps.

In the secondary market, AT&T’s bonds traded mostly flat to modestly softer.

Thomson Reuters Corp.’s 3.35% notes due 2026 traded about 6 bps tighter than where the bonds priced on Monday.

AT&T reopens five tranches

AT&T priced $4 billion in reopenings of five tranches of senior notes (Baa1//A-) on Tuesday, according to a market source.

The company sold $750 million of 2.3% notes due March 11, 2019 at a spread of 73 bps over Treasuries. The notes originally priced on March 5, 2014 in a $1.1 billion offering at Treasuries plus 77 bps. The total outstanding is $1.85 billion.

AT&T priced $750 million of 2.8% notes due Feb. 17, 2021 at 103 bps over Treasuries. The company first printed the issue on Jan. 29 in a $1.25 billion offering at Treasuries plus 150 bps. The total outstanding is $2 billion.

The company also sold $1.1 billion of 3.6% notes due Feb. 17, 2023 at Treasuries plus 135 bps. The notes originally were brought to market on Jan. 29 in a $1.5 billion tranche at Treasuries plus 195 bps. The issue has a total outstanding amount of $2.6 billion.

In the fourth tranche, AT&T priced $900 million of 4.125% notes due Feb. 17, 2026 at 150 bps over Treasuries. The notes were originally sold on Jan. 29 in a $1.75 billion offering at 220 bps over Treasuries. The total outstanding is $2.65 billion. The notes were seen trading at 151 bps bid late afternoon.

Finally, AT&T priced $500 million of 4.8% notes due June 15, 2044 at 210 bps over Treasuries. The company originally sold the issue in a $2 billion tranche on June 3, 2014 at 140 bps over Treasuries. The total outstanding is $2.5 billion.

The bookrunners were BNP Paribas Securities Corp., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC and RBC Capital Markets, LLC.

Proceeds from the reopenings will be used to repay outstanding bank loan debt.

AT&T is a Dallas-based telecommunications company.

Arizona Public Service prices

Arizona Public Service sold $350 million of 3.75% 30-year notes with a spread of 112 bps over Treasuries on Tuesday, according to an FWP filing with the Securities and Exchange Commission.

The notes (A2/A-/A) priced at 99.713 to yield 3.766%.

Barclays, Citigroup Global Markets Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC were the bookrunners.

Proceeds will be used to refinance via redemption or cancellation at par debt related to $76.85 million of pollution control revenue refunding bonds due June 1, 2034 issued through the Arizona Pollution Control Corp. In addition, proceeds will be used to replenish cash and/or refinance commercial paper borrowings temporarily used to fund capital expenditures.

Arizona Public Service, an electric utility based in Phoenix, is a subsidiary of Pinnacle West Capital Corp.

Thomson Reuters firms

In the secondary market, Thomson Reuters’ 3.35% notes due 2026 traded tighter at 149 bps offered earlier on Tuesday, a source said.

The company sold $500 million of the notes (Baa2/BBB+/BBB+) on Monday at a spread of 155 bps over Treasuries.

Thomson Reuters is a media and information company based in New York City.

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