Morning Commentary: Verizon/AOL deal grabs market focus; AbbVie mixed; Shell notes flat

By Cristal Cody

Tupelo, Miss., May 12 – High-grade bonds were mixed in early trading on Tuesday following Monday’s bond sell-off with much of the market’s attention focused on Verizon Communications Inc.’s plan to acquire AOL Inc. for $4.4 billion in cash, sources said.

Verizon’s bonds (Baa1/BBB+/A-) were seen mostly softer ahead of the announcement. The New York City-based telecommunications company’s 3.5% notes due 2024 traded late Monday 1 basis point softer at 131 bps bid, a source said. Verizon sold $2.5 billion of the notes on Oct. 22, 2014 at a spread of Treasuries plus 135 bps.

In trading early Tuesday, AbbVie Inc.’s senior notes (Baa1/A) were mixed.

Shell International Finance BV’s 3.25% senior notes due 2025 traded unchanged.

The three-month Libor yield was stable at 28 bps.

AbbVie mixed

AbbVie’s 3.6% notes due 2025 eased 1 bp to 138 bps offered, a market source said.

The company sold $3.75 billion of the notes at Treasuries plus 145 bps on May 5.

AbbVie’s 4.7% senior notes due 2045 firmed 2 bps to 172 bps offered.

The company priced $2.7 billion of the notes at Treasuries plus 180 bps in the May 5 sale.

AbbVie is a biopharmaceutical company based in Abbott Park, Ill.

Shell steady

Shell International Finance’s 3.25% notes due 2025 were unchanged early Tuesday at 93 bps offered, a market source said.

The notes traded late Monday afternoon at 94 bps bid, 93 bps offered.

Shell sold $2.75 billion of the notes (A1/AA/) on Wednesday at Treasuries plus 105 bps.

The company is a subsidiary of the Hague, the Netherlands-based Royal Dutch Shell plc.

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