Primary action slows; American Financial prices $350 million; AT&T, Verizon mostly soften

By Cristal Cody

Tupelo, Miss., May 25 – Primary action slowed in the high-grade bond market on Thursday following nearly $40 billion of volume week to date, sources report.

American Financial Group, Inc. sold $350 million of 30-year senior notes.

NOVA Chemicals Corp. also priced a $2.1 billion split-rated two-tranche offering of notes.

Little market activity is expected on Friday with the financial markets set to close at 2 p.m. ET for the long Memorial Day holiday weekend.

The Markit CDX North American Investment Grade index closed the day mostly flat at a spread of 62 basis points.

In secondary trading, bonds in the telecommunications sector mostly softened on Thursday.

AT&T Inc.’s notes (Baa1/BBB+/A-) traded about 3 bps to 4 bps weaker.

Verizon Communications Inc.’s notes (Baa1/BBB+/A-) were mixed.

American Financial prices

American Financial Group sold $350 million of 4.5% 30-year senior notes on Thursday at 99.46 to yield 4.533%, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes (Baa1/BBB+/) priced on the tight side of guidance with a spread of 160 bps over Treasuries.

J.P. Morgan Securities LLC, BofA Merrill Lynch and Wells Fargo Securities, LLC were the lead managers.

Proceeds will be used to redeem all of the company’s $230 million outstanding of 6.375% senior notes due June 2042, which become redeemable on June 12. The balance of proceeds will be used for general corporate purposes, which may include the redemption of all or a portion of the company’s $125 million outstanding of 5.75% senior notes due August 2042, which become redeemable on Aug. 25.

American Financial Group is a Cincinnati-based holding company for property and casualty insurance subsidiaries.

AT&T eases

AT&T’s 4.25% notes due March 1, 2027 softened 4 bps over the session to 173 bps bid, according to a market source.

The company priced $2 billion of the notes on Jan. 31 at a spread of Treasuries plus 180 bps.

AT&T’s 5.45% notes due March 1, 2047 eased 3 bps to 224 bps bid on Thursday.

The $2 billion tranche of bonds priced on Jan. 31 at Treasuries plus 240 bps.

AT&T is a Dallas-based telecommunications company.

Verizon mixed

Verizon Communications’ 4.125% notes due March 16, 2027 eased 2 bps in secondary trading to 149 bps bid, a market source said.

Verizon sold $3.25 billion of the notes on March 13 at a spread of Treasuries plus 160 bps.

The company’s 5.5% notes due March 16, 2047 firmed about 1 bp to 204 bps bid.

Verizon sold $1.5 billion of the bonds in the March 13 offering at a Treasuries plus 230 bps spread.

The telecommunications company is based in New York City.

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