Morning Commentary: High-grade primary pace thins; American Airlines to price; AT&T active

By Cristal Cody

Tupelo, Miss., Sept. 20 – The high-grade bond market saw a mostly quiet start to Wednesday’s session with one reported issuer in the deal pipeline.

Market focus is expected to be on the Federal Reserve’s Federal Open Market Committee’s monetary policy statement following a two-day meeting that concludes later in the day.

In deal action, American Airlines, Inc. plans to price $193.44 million of series 2016-3B pass-through certificates (expected Baa3/BBB).

In the secondary market, AT&T Inc.’s bonds (Baa1/BBB+/A-) have traded heavily over the week, a source said.

AT&T’s 3.9% notes due Aug. 14, 2027 were fairly active over the morning and were last seen at 100.85. The notes went out on Tuesday at 101.02.

AT&T priced $5 billion of the notes on July 27 at 99.827 to yield 3.92% and a spread of 160 basis points over Treasuries.

The company plans to acquire Time Warner Inc. (Baa2/BBB/BBB+) in an $85.4 billion cash and stock deal expected to close before the end of the year.

Time Warner’s 2.95% notes due July 15, 2026 slipped to 95.02 in light secondary trading over the morning from 96.60 on Tuesday, according to a market source.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.7 to yield 3.1%, or a spread of 135 bps over Treasuries.

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