Morning Commentary: Pre-holiday high-grade action wanes; AT&T trades; Time Warner flat

By Cristal Cody

Tupelo, Miss., Sept. 1 – The high-grade bond market is expected to see little action on Friday.

The U.S. markets will stay open for the full session and will close on Monday for the Labor Day holiday.

Primary action has been light over the week, while the secondary market has seen steady volume.

Investment-grade secondary trading volume totaled $15.26 billion on Thursday, up from $13.70 billion on Wednesday, according to Trace.

AT&T Inc.’s paper (Baa1/BBB+/A-) has been trading heavily over the last few sessions. The company plans to acquire Time Warner Inc. (Baa2/BBB/BBB+) in an $85.4 billion cash and stock deal that is expected to close before the end of the year.

AT&T’s 3.9% notes due Aug. 14, 2027 were up more than a point at 102.35 mid-morning. The notes went out on Thursday at 100.99, a source said.

The notes priced in a $5 billion tranche on July 27 at 99.827 to yield 3.92% and a spread of 160 basis points over Treasuries.

Time Warner’s 2.95% notes due July 15, 2026 were not seen in early trading after going out on Thursday at 95.52.

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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