Midday Commentary: Investment-grade bonds better in early trade; financials firm; AT&T slips

By Cristal Cody

Tupelo, Miss., June 6 – Investment-grade bonds remained mostly better in early trading on Friday following the release of the May jobs report, according to market sources. The firmness continued the tightening seen Thursday.

The Labor Department reported that 217,000 jobs were added over the month, slightly higher than the 215,000 forecast. The unemployment rate was unchanged at 6.3%.

In the secondary market, Wells Fargo & Co.’s paper tightened, along with other bank and financial paper, according to a market source.

Royal Bank of Scotland Group plc’s 5.125% subordinated tier 2 notes due 2024 traded about 7 basis points better, a source said.

AT&T Inc.’s 4.8% notes due 2044 lost about 2 points in early trading, according to a market source.

The Markit CDX North American Investment Grade series 22 index closed 2 bps tighter at a spread of 60 bps in the previous session.

Wells Fargo firms

Wells Fargo’s 4.1% subordinated notes due 2026 traded about 4 bps tighter at 145 bps offered, a source said.

The notes have traded mostly better over the week and rose to 100.89 in midday trading from 100.59 on Thursday, according to a market source.

The bank (A2/A+/AA-) sold the 12-year notes on May 27 at 99.897 to yield 4.111%, or a spread of Treasuries plus 160 bps.

Wells Fargo is based in San Francisco.

RBS tightens

Royal Bank of Scotland’s 5.125% notes due 2024 (Ba3/BB+/BBB-) tightened about 7 bps to 256 bps offered, according to a market source.

Royal Bank of Scotland sold $2.25 billion of the 10-year notes on May 21 at a spread of Treasuries plus 270 bps.

The financial services company is based in Edinburgh.

AT&T slips

AT&T’s 4.8% notes due 2044 (A3/A-/A) fell to 100.65 in midday trading on Friday after closing up at 102.64 on Thursday, according to a market source.

The notes closed at 100.57 on Wednesday.

AT&T sold $2 billion of the 30-year notes at 99.636 to yield 4.823% on Tuesday.

The telecommunications company is based in Dallas.

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