Midday Commentary: Credit spreads ease; AutoZone notes tighten in early trade; Verizon widens

By Cristal Cody

Tupelo, Miss., Jan. 8 - Investment-grade corporate bond spreads opened modestly wider on Wednesday, according to market sources.

The Markit CDX North American Investment Grade series 21 index eased 1 basis point to a spread of 64 bps on Tuesday.

AutoZone Inc.'s 1.3% senior notes due 2017 (Baa1/BBB/), which priced on Tuesday, tightened in early trading Wednesday, a source said.

In other secondary trading, bonds in the telecommunications sector have widened since Friday, according to market sources.

"Not really sure [why]," a trader said.

AutoZone firms

AutoZone's 1.3% notes due 2017 firmed to 51 bps bid, 47 bps offered early Wednesday from where the notes went out in the previous session at 53 bps bid, 51 bps offered, according to traders.

The Memphis-based automotive parts retailer sold $400 million of the notes on Tuesday at Treasuries plus 55 bps.

Verizon widens

Verizon Communications Inc.'s bonds (Baa1/BBB+/A-) have eased in trading over the last few sessions, according to a trader.

Verizon's 5.15% notes due 2023 were quoted early Wednesday at 132 bps bid, 129 bps offered. The issue traded on Friday at 118 bps bid, 115 bps offered.

Verizon sold $11 billion of the 10-year notes at Treasuries plus 225 bps on Sept. 11 as part of a record $49 billion eight-tranche debt offering.

The company's long issue of 6.55% bonds due 2043 (Baa1/BBB+/A-) widened to 152 bps bid, 149 bps offered early Wednesday, a trader said. The bonds were quoted on Monday at 141 bps bid.

Verizon sold $15 billion of the 30-year bonds at Treasuries plus 265 bps in the September offering.

The telecommunications company is based in New York City.

AT&T eases

Also in the telecom sector, AT&T Inc.'s 4.3% global notes due 2042 (A3/A-/A) widened to 150 bps bid, 145 bps offered, a trader said early Wednesday.

The bonds were quoted on Friday unchanged on the day at 140 bps bid, 135 bps offered.

AT&T completed a private debt exchange in 2012 covering $4 billion of various notes with rates of 6% to 8.75% for $1.96 billion in the 4.3% global notes due 2042 and $3.04 billion in 4.35% global notes due 2045.

The telecommunications company is based in Dallas.

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