Midday Commentary: High-grade bond spreads firm; Time Warner Cable active in morning trade

By Cristal Cody

Tupelo, Miss., Nov. 25 - Investment-grade bond spreads opened tighter on Monday, while Time Warner Cable Inc.'s bonds continue to actively trade on reports the company could be a takeover target, according to market sources.

The Markit CDX North American Investment Grade series 21 index tightened 2 basis points on Friday to a spread of 69 bps.

Time Warner Cable's notes traded nearly 70 bps tighter before moving back to unchanged in the secondary market on Friday, a trader said.

Reports circulated that both Comcast Corp. and Charter Communications Inc. are eyeing Time Warner Cable (Baa2/BBB/BBB) as an acquisition target to gain bigger share in the cable television market.

"Time Warner Cable bondholders are in limbo as lower-rated Charter Communications and better-rated Comcast mull a number of possible scenarios that include buying Time Warner Cable and breaking-up the company," RBC Capital Markets, LLC analysts said in a note on Monday.

Time Warner Cable's 4.5% senior debentures due 2042 opened Monday's session at 260 bps bid, 253 bps offered, a trader said.

The New York City-based broadband communications company sold $1.25 billion of the debentures on Aug. 7, 2012 with a spread of 183 bps over Treasuries.

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