Midday Commentary: Credit spreads tighten; Verizon wider ahead of deal offering; Dell softer

By Cristal Cody

Tupelo, Miss., Sept. 10 - Investment-grade bonds continued to tighten on Tuesday, while bonds from Verizon Communication Inc. and Dell Inc. stayed softer in the early session, market sources said.

"Despite the threat of a significant amount of supply looming from Verizon, credit spreads are tighter this morning and near the narrow end of the recent trading range," RBC Capital Markets, LLC analysts said in a note.

The Markit CDX Series 20 North American Investment Grade index declined 3 basis points to a spread of 79 bps on Monday.

Verizon's bonds widened further in early trading on Tuesday ahead of the eight-tranche offering of senior notes expected to price over the week, market sources said.

Verizon's 2.45% notes due 2022 (Baa1/BBB+/A-) eased to the 166 bps area in the morning session, wider than where the notes traded at 157 bps bid, 150 bps offered on Monday, a trader said.

The New York City-based telecommunications company plans to use the proceeds from the notes offering to help finance its acquisition of Vodafone Group plc's 45% stake in Verizon Wireless.

Dell softer

In other secondary trading, Dell's bonds remain weaker in front of Thursday's shareholder vote on company founder Michael Dell's $25 billion buyout offer to take the company private, sources said.

Dell's 4.625% notes due 2021 (Baa1/BBB/BB+) were offered at 97.875 early Tuesday, according to a trader.

The Round Rock, Texas-based computer and technology company sold $400 million of the notes at 99.541 in March 2011.

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