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Morning Commentary: High-grade primary action quiet; AT&T notes improve; Time Warner softens
By Cristal Cody
Tupelo, Miss., July 7 – The high-grade bond market stayed quiet over the morning on Friday with market attention focused on the Labor Department’s June jobs report.
In June, total non-farm payroll employment rose by 222,000, much higher than the 178,000 increase economists had forecasted. The unemployment rate was up slightly to 4.4% from 4.3% in May.
Primary action has been light over the holiday week with just three issuers in the deal market on Thursday. U.S. high-grade issuers declined to price bonds during the short market session on Monday and on Wednesday following the Independence Day holiday.
About $5 billion to $10 billion of supply was expected by market participants for the week.
AT&T, Time Warner mixed
Secondary market action picked up late in the week. On Thursday, $17.49 billion of investment-grade issues were traded, up from $13.7 billion on Wednesday and $2.52 billion on Monday, according to Trace.
AT&T Inc.’s notes (Baa1/BBB+/A-) have been trading strongly over the last few sessions. The company announced plans last fall to acquire Time Warner Inc. in an $85.4 billion cash and stock deal expected to close before the end of 2017.
AT&T’s 4.25% notes due March 1, 2027 rose to 103.14 in early trading from where the bonds last traded on Thursday at 102.98, according to a market source.
The Dallas-based telecommunications company sold $2 billion of the notes on Jan. 31, 2017 at 99.94 to yield 4.26% and a spread of Treasuries plus 180 basis points.
Time Warner’s 2.95% notes due 2026 softened modestly at the session opening to 94.70 from 94.76 on Thursday, a source said.
Time Warner (Baa2/BBB/BBB+) sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1% and a spread of 135 bps over Treasuries.
The media and entertainment company is based in New York.
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