Midday Commentary: AT&T flat; Verizon lower; high-grade spreads at bottom of range

By Cristal Cody

Tupelo, Miss., March 7 - High-grade telecommunications bonds remain actively traded following AT&T Inc.'s $2.5 billion three-tranche deal brought earlier in the week, according to market sources on Friday.

In the secondary market, AT&T's new 3.9% notes due 2024 were flat, a source said.

Verizon Communications Inc.'s notes fell in early trading, according to a market source.

Investment-grade bond spreads are at the bottom of the recent range, a source said.

The Markit CDX North American Investment Grade series 21 index eased 1 basis point on Thursday to a spread of 63 bps.

Market tone improved over the morning on Friday after the Labor Department reported the February non-farm payrolls report came in stronger than expected. About 175,000 seasonally adjusted jobs were added during the month, compared to the forecast of 150,000. The unemployment rate rose to 6.7% in February from 6.6% in January.

AT&T unchanged

In the secondary market, AT&T's 3.9% notes due 2024 traded flat at 125 bps offered, a source said.

The company sold $1 billion of the 10-year notes (A3/A- /A) on Wednesday at a spread of Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Verizon drops

Verizon's 5.15% notes due 2023 (Baa1/BBB+/A-) dropped to the 108 area in early trading on Friday, down from the 112 area on Monday, according to a market source.

The notes were quoted modestly tighter at a spread of 130 bps offered, in line with levels seen in January, according to a source.

Verizon sold $11 billion of the notes at 99.676 to yield 5.192%, or a spread of Treasuries plus 225 bps, on Sept. 11 as part of a $49 billion eight-part offering.

The telecommunications company is based in New York City.

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