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Morning Commentary: Investment-grade bond supply thins; KfW markets notes; Time Warner soft
By Cristal Cody
Tupelo, Miss., Jan. 24 – Deal action stayed mostly quiet at the start of Wednesday’s session with only one reported investment-grade bond offering on deck.
Frankfurt-based bank KfW (Aaa/AAA/AAA) plans to price an offering of long 10-year global notes, according to a market source.
The notes due April 3, 2028 are initially talked to price with a spread in the mid-swaps plus 23 basis points area.
BofA Merrill Lynch, J.P. Morgan Securities LLC and TD Securities (USA) LLC are the lead managers.
Issuance in corporate bonds is expected to pick up soon after companies exit earnings blackout periods, according to market sources.
Elsewhere, high-grade secondary trading was robust on Tuesday with $20.56 billion of bonds traded, up from $17.87 billion on Monday, according to Trace.
AT&T Inc.’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) were slightly active in the secondary market over the morning, though not as heavily traded as the previous day, a source said. The notes were last seen at 99.95. The bonds went out on Tuesday at 100.16.
The Dallas-based telecommunications company sold $5 billion of the notes on July 27, 2017 at 99.827 to yield 3.92% and a spread of 160 bps over Treasuries.
The Justice Department has filed suit to block AT&T’s $85.4 billion cash and stock acquisition of Time Warner Inc.
Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) traded early Wednesday at 93.08, softer than where the notes last traded on Tuesday at 93.41.
The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of Treasuries plus 135 bps.
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