Morning Commentary: Supply on tap; AT&T mixed; Morgan Stanley eases; credit spreads weaken

By Cristal Cody

Tupelo, Miss., Feb. 3 – The high-grade deal pipeline started moving again on Wednesday after volatility caused a lull in domestic primary action on Tuesday.

Home Depot Inc. is on tap to price two tranches of senior notes.

National Rural Utilities Cooperative Finance Corp. is marketing a two-part offering of collateral trust bonds.

High-grade bonds traded mostly flat to softer as the session got underway.

AT&T Inc.’s new notes (Baa1/BBB+/A-) were mixed in the secondary market.

Morgan Stanley & Co. Inc.’s 3.875% senior notes due 2026 eased 4 basis points.

Credit spreads were weaker at the start of the day. The Markit CDX North American Investment Grade index opened 1 bp wider at a spread of 109 bps.

The three-month Libor yield rose 1 bp to 62 bps on Wednesday.

Secondary trading volume continues to remain strong with $19 billion of high-grade issues traded on Tuesday, up from $15.4 billion on Monday, according to Trace.

AT&T mixed

AT&T’s 4.125% notes due 2026 were unchanged in early secondary trading at 218 bps offered, a source said.

The company sold $1.75 billion of the notes on Friday at a spread of Treasuries plus 220 bps.

AT&T’s 5.65% bonds due 2047 eased 5 bps to 294 bps offered.

The bonds priced in a $1.5 billion tranche in Friday’s offering at Treasuries plus 290 bps.

AT&T is a Dallas-based telecommunications company.

Morgan Stanley softens

Morgan Stanley’s 3.875% notes due 2026 traded 4 bps weaker at 184 bps offered in the secondary market, a source said.

Moran Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at 185 bps over Treasuries.

The financial services company is based in New York City.

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