Morning Commentary: Charter bonds tighten; Microsoft eases; high-grade credit spreads improve

By Cristal Cody

Tupelo, Miss., Nov. 5 – Investment-grade bonds were mixed in secondary trading at the start of Thursday’s session.

Charter Communications Inc.’s split-rated bonds (Ba1/BBB-) tightened about 8 basis points to 10 bps ahead of the company’s $2.5 billion 10.25-year senior notes offering expected later in the day.

Microsoft Corp.’s senior notes (Aaa/AAA/AA+) brought a week ago softened about 2 bps in the secondary market but remain better than issuance.

The Markit CDX North American Investment Grade 25 index opened modestly tighter at a spread of 77 bps.

“IG credit spreads have come in 15 bps from the early October wides, which is about one third of their year-to-date trading range,” according to a RBC Capital Markets LLC report on Thursday. “We think there’s some room left to narrow through November.”

The secondary market saw $17.11 billion of investment-grade issues traded on Wednesday, up from $16.17 billion of bonds traded on Tuesday, according to Trace.

Charter stronger

Charter Communications’ 4.908% notes due 2025 continued to tighten over the morning to 233 bps offered, a market source said.

The notes headed out on Wednesday 9 bps tighter at 234 bps bid.

The company sold $4.5 billion of the notes on July 9 at a spread of Treasuries plus 260 bps.

Charter Communications’ 6.484% notes due 2045 were quoted tighter over the morning at 314 bps offered.

The bonds traded late Wednesday afternoon 5 bps better at 322 bps bid.

Charter Communications sold $3.5 billion of the bonds (Ba1/BBB-) in the July 9 offering at Treasuries plus 335 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

Microsoft eases

Microsoft’s 3.125% notes due 2025 eased about 2 bps to 80 bps offered, according to a market source.

The company sold $3 billion of the notes on Oct. 29 at Treasuries plus 95 bps.

Microsoft’s 4.45% bonds due 2045 traded about 2 bps weaker at 140 bps offered.

Microsoft sold $3 billion of the bonds in the Oct. 29 sale at 150 bps over Treasuries.

The computer software company is based in Redmond, Wash.

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