Morning Commentary: High-grade primary action quiet; secondary volume light; AT&T mixed

By Cristal Cody

Tupelo, Miss., Aug. 24 – No investment-grade issuers were reported in the bond deal pipeline early Thursday.

Primary action is expected to remain thin until after the Labor Day holiday with many desks already lightly staffed, sources report.

Secondary trading volume also has been light over the first three sessions of the week. On Wednesday, $14.13 billion of high-grade bonds were traded, compared to $15.75 billion of volume on Tuesday and $10.9 billion on Monday, according to Trace.

AT&T Inc.’s global senior notes (Baa1/BBB+/A-) that priced in a $22.5 billion seven-tranche offering on July 27 have traded heavily over the last three sessions and remained active early Thursday, a source said.

The company’s 3.9% notes due Aug. 14, 2027 jumped to 102.34 as the session got underway from where the notes last traded on Wednesday at 100.33.

AT&T sold $5 billion of the 10-year notes at 99.83 to yield 3.92% and a spread of 160 basis points over Treasuries.

AT&T’s 4.9% notes due Aug. 14, 2037 softened to 100.51 in early secondary trading. The notes went out on Wednesday at 100.62.

The $4.5 billion tranche priced at 99.82 to yield 4.91%, or a spread of Treasuries plus 200 bps.

AT&T plans to use the proceeds from the deal to help fund the Dallas-based telecommunications company’s acquisition of Time Warner Inc.

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