Rentenbank lone issuer, prices $2 billion; corporate supply quiet; telecom bonds mixed

By Cristal Cody

Tupelo, Miss., Feb. 14 – Landwirtschaftliche Rentenbank priced an upsized $2 billion of two-year notes on Wednesday as the sole issuer in the high-grade primary market.

Corporate issuers stayed to the sidelines as concerns over higher interest rates grew following the release of the January core consumer price index, market sources said.

About $15 billion to $20 billion of bond volume was expected by syndicate sources for the week, but issuance has been light so far with less than $5 billion of corporate supply.

The Markit CDX North American Investment Grade 29 index tightened more than 1 basis point to end the session at a spread of 57 bps.

In the secondary market, bonds in the telecommunications sector were mixed.

Verizon Communications Inc.’s bonds traded flat to about 6 bps weaker, a source said.

AT&T Inc.’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) were mostly unchanged on the day.

AT&T’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) headed out flat at 120 bps bid but about 8 bps wider than where the notes traded on Monday, according to a market source.

The Dallas-based telecommunications company sold $5 billion of the notes on July 27, 2017 at a spread of 160 bps over Treasuries.

AT&T heads to court in March against the Justice Department, which filed suit to block its $85.4 billion cash and stock acquisition of Time Warner Inc.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) traded unchanged over the day at 129 bps bid, about 1 bp tighter than where the notes were seen on Monday.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at a spread of Treasuries plus 135 bps.

On Tuesday, telecom bonds on average ended 1 bp to 4 bps wider, according to a BofA Merrill Lynch research note released on Wednesday.

Rentenbank upsizes

Landwirtschaftliche Rentenbank (Aaa/AAA/AAA) priced $2 billion of 2.375% notes due Feb. 21, 2020 in its offering on Wednesday at a spread of mid-swaps minus 4 bps, or Treasuries plus 23.4 bps, according to a market source.

The notes were initially talked to price in the mid-swaps minus 3 bps area with guidance early Wednesday set at mid-swaps minus 4 bps.

The deal was upsized from $1 billion.

BNP Paribas Securities Corp., BofA Merrill Lynch, Goldman Sachs & Co. and RBC Capital Markets, LLC were the bookrunners.

The notes are guaranteed by Germany.

The German development agency for agribusiness is based in Frankfurt.

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