Morning Commentary: Qualcomm short-dated notes firm, longs flat; spreads forecast to tighten

By Cristal Cody

Tupelo, Miss., May 15 – Qualcomm Inc.’s $10 billion eight-part offering of senior notes (A1/ A+/) that priced on Wednesday was mixed in early secondary trading on Friday.

The three-month Libor yield firmed 1 basis point to 27 bps over the morning.

The Markit CDX North American Investment Grade series 23 index closed on Thursday 2 bps tighter at a spread of 64 bps. The index ended the previous week at a spread of 63 bps.

“Rates remained the biggest story this week, and although credit markets felt uneasy during the Treasury sell-off Tuesday, credit improved to end the week almost unchanged,” Barclays analysts said in a note on Friday. “Given robust investment grade credit fundamentals and a generally supportive macro backdrop, we expect investment grade spreads to tighten modestly through 2015-end.”

Qualcomm mixed

In the secondary market, Qualcomm’s short-dated notes traded better, while the longer end was mostly unchanged from issuance, a source said.

Qualcomm’s 1.4% notes due 2018 were quoted at 44 bps offered. The company sold $1.25 billion of the notes at a spread of Treasuries plus 50 bps.

The tranche of 2.25% notes due 2020 traded 2 bps better than issuance at 68 bps offered. The company sold $1.75 billion of the notes at Treasuries plus 70 bps.

The company’s 3.45% notes due 2025, priced in a $2 billion slice at Treasuries plus 120 bps, were unchanged from issuance.

Qualcomm’s 4.65% notes due 2035 traded flat at 160 bps offered. The company sold $1 billion of the notes a spread of Treasuries plus 160 bps.

Qualcomm is a San Diego-based company that designs, develops, manufactures and markets wireless telecommunications products and services.

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