Market quiets to wrap $30 billion week; DirecTV, AT&T trade better in secondary

By Aleesia Forni and Cristal Cody

Virginia Beach, May 23 - A quiet Friday session ended another busy week for the high-grade bond market.

More than $30 billion of investment-grade paper priced this week, besting earlier estimates of $20 billion to $25 billion of supply.

This makes the second consecutive week that the primary market has seen a $30 billion-plus week.

Even with the primary's pace in recent weeks, demand for investment-grade bonds remains mostly strong.

Lipper reported $871 million of inflows into corporate investment-grade funds for the week ended May 21, down from last week's inflows of $2.028 billion.

This brings the year-to-date figure to more than $38 billion.

The market did see National General Holdings Corp. sell $250 million of 6.75% senior notes due May 15, 2024 on Friday, according to a company release.

The New York-based insurance holding company sold the notes in a private placement transaction exempt from registration under the Securities Act of 1933.

Activity was mostly quiet in the secondary market with paper slightly better on the day, according to sources.

The Markit CDX North American Investment Grade series 22 index headed out 1 basis point tighter at a spread of 63 bps.

DirecTV Holdings LLC's 4.45% notes due 2024 recovered losses from the previous session and climbed more than a point during the session, according to a market source.

DirecTV's notes have improved over the week following the announcement AT&T Inc. plans to acquire the satellite television provider for about $48.5 billion in cash and stock, sources said.

AT&T's 3.9% notes due 2024 also traded higher on the day, according to a market source.

DirecTV stronger

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) rose to 105.92 in trading on Friday, up from 104.21 on Thursday, according to a market source.

The notes traded on Wednesday at 105.81.

DirecTV Holdings and DirecTV Financing Co. priced $1.25 billion of the notes on March 17 at 99.63 to yield 4.496%.

The digital entertainment company is based in El Segundo, Calif.

AT&T rises

AT&T's 3.9% notes due 2024 (A3/A-/A) climbed to 104.86 in the secondary market, according to a market source.

The issue traded last on Thursday at 103.02.

AT&T sold $1 billion of the 10-year notes on March 5 at 99.696 to yield 3.937%.

The telecommunications company is based in Dallas.

Bank/brokerage CDS costs flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.'s CDS costs ended flat at 69 bps bid, 71 bps offered. Citigroup Inc.'s CDS costs firmed 1 bp to 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs declined 1 bp to 56 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs were flat at 34 bps bid, 37 bps offered.

Merrill Lynch's CDS costs closed unchanged at 73 bps bid, 76 bps offered. Morgan Stanley's CDS costs firmed 1 bp to 72 bps bid, 76 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended unchanged at 83 bps bid, 86 bps offered.

Paul Deckelman contributed to this review.

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