New deals taking break until post-Labor Day; AT&T, Bank of America, Goldman paper widens

By Andrea Heisinger and Cristal Cody

New York, Sept. 1 - Issuers took a day off from the investment-grade bond market on Thursday as expected.

Following one corporate deal and one in the emerging markets sector the previous day, syndicate desks had predicted there would be no more sales until following the Labor Day holiday.

"We're all thin [on staff] tomorrow," a source said. "I think it will be regrouping and then a bunch of deals [next week]."

There were only a handful of bond sales in the first part of the week, and they all priced on Tuesday and Wednesday.

A syndicate source said: "We're seeing $80 billion in supply for September." There was $62.517 billion of bonds priced in August, according to Prospect News data.

"Assuming nothing crazy happens over Labor Day weekend, we should see some deals Tuesday," the source said.

Overall trading volume fell more than 25% to about $10 billion on Thursday.

"Decent volumes in the morning, but then everything died out in the afternoon," a trader said. "A lot of people are taking off tomorrow or at least taking a half day."

The Markit CDX Series 16 North American high-grade index eased 2 basis points to a spread of 117 bps.

Spreads seemed a "bit tighter," though, a trader said.

Praxair, Inc.'s notes traded stronger early in the day, traders said. Commonwealth Edison Co.'s two tranches of bonds sold earlier in the week also stayed about 2 bps tighter in trading.

AT&T, Inc.'s bonds widened about 5 bps on Thursday after coming in the previous day on news the Justice Department moved to block its $39 billion takeover of T-Mobile USA. Peer Sprint Nextel Corp.'s bonds were unchanged in trading after firming on Wednesday.

Debt from Bank of America Corp. and Goldman Sachs Group Inc. was weaker in trading.

Financial paper was "mostly unchanged with the exception of Bank of America and Goldman Sachs, which are 5 to 10 [basis points] wider," a trader said.

Reflecting lessened investor confidence in the sector, bank CDS costs were up 3 bps to 10 bps while broker CDS costs up 5 bps to 10 bps.

Treasuries were stronger on jobs and factory reports, and yields fell 9 bps to 10 bps on the longer end of the curve. The 10-year note yield fell to 2.13% from 2.22%. The yield on the 30-year bond dropped 10 bps to 3.5%.

Praxair's 10-year notes

Industrial gas maker Praxair's new 3% notes due 2021 (A2/A) firmed to 89 bps bid, 86 bps offered, traders said Thursday.

The company sold $500 million of the notes to yield 93 bps over Treasuries on Wednesday.

The company is based in Danbury, Conn.

AT&T wider

AT&T's bonds initially traded tighter after the Justice Department filed to prevent the $39 billion takeover of T-Mobile on Wednesday, but widened about 5 bps on Thursday, a trader said.

AT&T's 3.875% notes due 2021 widened to 142 bps bid, 135 bps offered from 135 bps bid, 127 bps offered on Wednesday, the trader said.

Anther trader saw the notes at 139 bps bid, 137 bps offered.

Late afternoon, AT&T's 10-year notes firmed slightly to 137 bps bid, 134 bps offered, a trader at another desk said. Also in trading, AT&T's 2.4% notes due 2016 were seen at 121 bps bid, 116 bps offered.

The telecommunications company is based in Dallas.

Overland Park, Kansas-based Sprint's 8.75% bonds due 2032 were seen at 520 bps bid, 500 bps offered. Sprint's 7.375% notes due 2015 were quoted flat at 99.00 bid.

Commonwealth Edison firms

Commonwealth Edison's $600 million of first-mortgage bonds (Baa1/A-/BBB+) sold in two tranches on Tuesday stayed better in light trading on Thursday.

The 1.95% bonds due 2016 traded at 100 bps bid, 90 bps offered early morning with no activity seen late afternoon, a trader said. The $250 million offering of the five-year bonds priced at a spread of Treasuries plus 103 bps.

Commonwealth Edison's second tranche of 3.4% notes due 2021 was seen early in the day tighter at 125 bps bid, 115 bps offered, the trader said. Other traders saw the bonds at 116 bps offered. The company sold $350 million of the 10-year notes at 123 bps over Treasuries.

The electric subsidiary of Exelon Corp. is based in Chicago.

BofA, Goldman widen

Bank and financial paper was mostly flat in the secondary market, except for notes from Bank of America and Goldman Sachs, a trader said.

Charlotte, N.C.-based Bank of America's 5% notes due 2021 (A2/A/A+) widened to 345 bps bid, 330 bps offered on Thursday, a trader said.

New York-based Goldman Sachs' 5.25% notes due 2021 widened to 295 bps bid, 285 bps offered.

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