Morning Commentary: AT&T mixed; Thomson Reuters eases; credit spreads open wider

By Cristal Cody

Eureka Springs, Ark., May 4 – New investment-grade bonds priced in the first two days of the week traded unchanged to softer in the secondary market ahead of expected strong primary activity on Wednesday.

AT&T Inc.’s senior notes (Baa1//A-) that were reopened on Tuesday were flat to softer in secondary trading on Wednesday.

Thomson Reuters Corp.’s 3.35% notes due 2026 that were priced on Monday eased 4 basis points.

Credit spreads widened 3 bps on Tuesday and continued to leak wider early Wednesday.

The Markit CDX North American Investment Grade series 23 index opened the session 2 bps softer at a spread of 83 bps.

The three-month Libor yield was stable at 64 bps.

Secondary trading volume jumped to $17.98 billion on Tuesday from $11.6 billion on Monday, according to Trace.

AT&T flat to weaker

AT&T’s 4.125% notes due 2026 widened about 1 bp to 151 bps offered, a market source said.

AT&T sold $900 million in a tap of the issue on Tuesday at a spread of Treasuries plus 150 bps.

The notes originally were priced on Jan. 29 in a $1.5 billion tranche at Treasuries plus 195 bps.

AT&T’s 4.8% notes due 2044 were flat at 210 bps offered.

The company sold $500 million of the bonds in an add-on on Tuesday at 210 bps over Treasuries.

The company originally sold the notes in a $2 billion tranche on June 3, 2014 at 140 bps over Treasuries.

AT&T is a Dallas-based telecommunications company.

Thomson Reuters softens

Thomson Reuters’ 3.35% notes due 2026 eased 4 bps to 153 bps offered in secondary trading, according to a market source.

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 multinational media and information company based in New York City.

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