Midday Commentary: Investment-grade market rebounds from weakness; Verizon, AT&T tighten

By Cristal Cody

Tupelo, Miss., Oct. 10 - Investment-grade bonds unwound most of the widening seen earlier in the week with bonds trading 3 basis points to 5 bps better early Thursday, according to market sources.

The Markit CDX North American Investment Grade series 21 index tightened on Wednesday 1 bp to a spread of 83 bps.

"It's better today," one trader said.

In the technology, media and telecom sector, bonds from Verizon Communication Inc., AT&T Inc. and Time Warner Cable Inc. firmed about 3 bps, the trader said.

Verizon firms

Verizon's 5.15% notes due 2023 (Baa1/BBB+/A-) firmed to 158 bps bid, 155 bps offered early Thursday, a trader said.

Verizon sold $11 billion of the 10-year notes with a spread of Treasuries plus 225 bps in the record $49 billion eight-tranche deal priced on Sept. 11.

On the long end of the offering, Verizon's 6.55% bonds due 2043, which traded at 184 bps offered on Monday, tightened to 183 bps bid, 180 bps offered in Thursday's early session.

Verizon sold $15 billion of the 30-year bonds with a spread of Treasuries plus 265 bps.

The telecommunications company is based in New York City.

AT&T tightens

AT&T's bonds opened the session tighter, a trader said.

The company's 4.3% global notes due 2042 (A3/A-/A) firmed to 167 bps bid, 162 bps offered, a trader said.

The bonds traded a week ago at 172 bps bid, 167 bps offered.

AT&T is a Dallas-based communications company.

Time Warner Cable better

Time Warner Cable's bonds traded about 3 bps better over the morning, a trader said.

The company's 4% notes due 2021 (Baa2/BBB/BBB) firmed to 230 bps bid, 220 bps offered on Thursday.

The notes have widened since early August when the issue traded at 205 bps bid, 195 bps offered, according to market sources.

The New York City-based broadband communications company sold $1 billion of the notes on Sept. 7, 2011 at a spread of 210 bps over Treasuries.

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