Morning Commentary: Investment-grade primary market action quiet; AT&T, Time Warner active

By Cristal Cody

Tupelo, Miss., Dec. 20 – The high-grade bond market stayed quiet early Wednesday as attention centered on the U.S. tax legislation headed back to the House for a second vote.

A few issuers remain in the deal pipeline, but most market sources expect little to no issuance for the remainder of the year.

AT&T Inc.’s bonds (Baa1/BBB+/A-) were actively traded over the morning in the secondary market, a source said.

AT&T’s 3.9% notes due Aug. 14, 2027 improved to 100.15 from 100.10 on Tuesday.

The Dallas-based telecommunications company 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.

AT&T is scheduled to defend its $85.4 billion cash and stock acquisition of Time Warner Inc. that was scheduled to close before the end of the year in a federal lawsuit the Justice Department filed to stop the merger in a March 19, 2018 trial.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) also were active in secondary trading at the start of the session and were trading in the 94.51 area. The bonds traded on Tuesday in the 94.90 area.

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.

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