Morning Commentary: High-grade primary market quiet in pre-holiday session; AT&T bonds gain

By Cristal Cody

Tupelo, Miss., Nov. 22 – Little activity is expected in the high-grade bond market on Wednesday with most desks thinly staffed in front of the Thanksgiving Day holiday.

No issuers were reported in the deal pipeline over the morning.

AT&T Inc.’s bonds (Baa1/BBB+/A-) are stronger in the secondary market since the Justice Department announced on Monday that it had filed a federal lawsuit to stop the company’s acquisition of Time Warner Inc.

The $85.4 billion cash and stock acquisition was set to close before the end of the year.

AT&T’s 3.9% notes due Aug. 14, 2027 climbed to 101.92 early Wednesday, according to a market source. The notes went out on Tuesday at 101.51, up from 99.51 on Monday.

AT&T sold $5 billion of the notes on July 27 at 99.827 to yield 3.92% and a spread of 160 basis points over Treasuries.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) were seen over the morning at 95.13. The notes last traded in the previous session at 95.15 and went out on Monday at 94.88.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of Treasuries plus 135 bps.

In the overall secondary market, high-grade trading volume rose to $16.58 billion on Tuesday from $15.70 billion on Monday, according to Trace.

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