Ontario prices $2.5 billion bonds; primary volume thins; AT&T better; Time Warner eases

By Cristal Cody

Tupelo, Miss., Feb. 1 – The Province of Ontario sold $2.5 billion of five-year dollar bonds on Wednesday in an otherwise mostly quiet session with market attention on the Federal Reserve’s Federal Open Market Committee policy release.

Investment-grade bond issuance was strong in the first two sessions with deals that included a $17 billion seven-part notes offering from Microsoft Corp. on Monday and a $10 billion six-tranche global note sale from AT&T Inc. on Tuesday.

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

AT&T announced plans in October to acquire Time Warner Inc. in an $85.4 billion cash and stock deal that is expected to close before the end of 2017.

Time Warner’s 2.95% notes due 2026 eased 4 basis points over the day.

The Markit CDX North American Investment Grade index ended modestly tighter at a spread of 66 bps.

Investment-grade corporate secondary trading volume was heavy on Tuesday at a record high $28.15 billion, according to Trace and a market source.

Ontario prices $2.5 billion

The Province of Ontario sold $2.5 billion of 2.4% five-year dollar bonds on Wednesday at 99.752 to yield 2.453%, according to a market source and an FWP filing with the Securities and Exchange Commission.

The bonds due Feb. 8, 2022 (Aa2/A+/AA-) priced with a spread of mid-swaps plus 42 bps, or 49.35 bps over Treasuries, tighter than guidance.

The notes were talked to price in the mid-swaps plus 44 bps area.

The lead managers were BMO Capital Markets Corp., HSBC Bank plc, Morgan Stanley & Co. International plc and TD Securities (USA) LLC.

Proceeds from the sale will be used for general provincial purposes.

AT&T better

AT&T’s 4.25% notes due 2027 headed out better at 100.67, up from 100.39 early in the day, according to a market source.

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 2047 were better than pricing at 100.79 in late afternoon trading on Wednesday, better than where the bonds traded at 100.22 over the morning.

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

AT&T is a Dallas-based telecommunications company.

Time Warner eases

Time Warner’s 2.95% notes due 2026 eased 4 bps on Wednesday to 152 bps bid in the secondary market, a source said.

Time Warner (Baa2/BBB/BBB+) sold $800 million of the notes on May 5 at a spread of 135 bps over Treasuries.

The media and entertainment company is based in New York.

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