Morning Commentary: Ontario on tap; high-grade secondary volume heavy; AT&T notes improve

By Cristal Cody

Tupelo, Miss., Feb. 1 – The Province of Ontario is in Wednesday’s deal pipeline in the high-grade market with an offering of bonds.

Primary issuance has been robust over the week with a $17 billion seven-part notes deal from Microsoft Corp. on Monday and a $10 billion six-tranche global notes issue from AT&T Inc. on Tuesday.

Secondary trading volume was heavy on Tuesday with $28.15 billion of investment-grade issues traded, up from $17.5 billion on Monday, according to Trace. Of the 5,786 issues traded, 3,481 advanced, 2,122 declined and 50 were unchanged.

AT&T’s notes (Baa1/BBB+/A-) traded modestly better than issuance in the secondary market at the start of Wednesday’s session.

The three-month Libor yield dropped 1 basis point to 1.03% on Wednesday, according to a market source.

AT&T stronger

AT&T’s offering of 3.8% notes due 2024 climbed to 101.32 in early secondary trading from where the bonds closed at par on Tuesday, according to a market source.

AT&T sold $750 million of the notes on Tuesday at 99.936 and a spread of Treasuries plus 155 bps.

The company’s 4.25% notes due 2027 traded up to 100.39 on Wednesday morning.

AT&T priced $2 billion of the 10-year notes on Tuesday at 99.94 and a spread of Treasuries plus 180 bps.

The tranche of 5.45% notes due 2046 were better than pricing at 100.22 in early trading but off from where the paper went out at 100.55 on Tuesday.

The $2 billion tranche priced at 99.439, or Treasuries plus 240 bps.

AT&T is a Dallas-based telecommunications company.

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