Morning Commentary: High-grade deal pipeline slows; Duke Energy flat; Verizon, AT&T improve

By Cristal Cody

Tupelo, Miss., March 27 – The high-grade bond market opened mostly quiet on Monday with no reported issuers in the deal pipeline.

About $25 billion to $30 billion of supply is forecast by market participants for the week.

Issuance slowed late in the previous week as the Street focused on if the House would vote on a replacement plan for the Affordable Care Act. The vote was delayed and the bill pulled from the House floor on Friday.

In the secondary market, Duke Energy Ohio, Inc.’s 3.7% first mortgage bonds due June 15, 2046 that were reopened on Wednesday were not active and were unchanged from Friday.

Verizon Communications Inc.’s 4.125% notes due March 16, 2027 made slight gains over the morning.

AT&T Inc.’s 4.25% notes due March 1, 2027 improved modestly.

On Friday, $13.76 billion of investment-grade bonds were traded, according to Trace.

Duke Energy steady

Duke Energy Ohio’s 3.7% first mortgage bonds due June 15, 2046 (A2/A) were not active early Monday and last traded on Friday at 93.98, according to a market source.

The notes were soft on Friday at 109 bps bid, 106 bps offered.

Duke Energy Ohio priced a $100 million add-on to the bonds on Wednesday at 93.462 to yield 4.085%, or 107 bps over Treasuries.

The company originally sold $250 million of the bonds at 99.301 to yield 3.739%, or 125 bps over Treasuries, on June 20, 2016.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

Verizon better

Verizon Communications’ 4.125% notes due March 16, 2027 were better early Monday at 102.12 in the secondary market after heading out on Friday at 101.98, a market source said.

Verizon sold $3.25 billion of the notes (Baa1/BBB+/A-) on March 13 at 99.256 and a spread of Treasuries plus 160 bps.

The telecommunications company is based in New York City.

AT&T improves

AT&T’s 4.25% notes due March 1, 2027 traded a dime better at 101.75 on Monday, a market source said.

The company priced $2 billion of the notes (Baa1/BBB+/A-) on Jan. 31 at 99.94 and a spread of Treasuries plus 180 bps.

AT&T is a Dallas-based telecommunications company.

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