Morning Commentary: High-grade primary quiets; AT&T bonds active; Procter & Gamble flat

By Cristal Cody

Tupelo, Miss., Oct. 20 – The high-grade bond market opened on Friday with light activity.

The Federation des caisses Desjardins du Quebec (Aa2/A+/AA-) is concluding a three-day roadshow on Friday in Boston for a dollar-denominated Rule 144A and Regulation S offering, according to a market source. Barclays is the bookrunner.

In the secondary market, AT&T Inc.’s bonds (Baa1/BBB+/A-) remain heavily traded ahead of the company’s $85.4 billion cash and stock acquisition of Time Warner Inc. (Baa2/BBB/BBB+) expected to close before the end of the year.

AT&T’s 3.9% notes due Aug. 14, 2027 were last seen trading mid-morning at 99.80, down from 100.11 on Thursday, a source said.

AT&T sold $5 billion of the notes 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 flat at 95.48.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of Treasuries plus 135 bps.

Procter & Gamble Co.’s 2.85% senior notes due Aug. 11, 2027 (Aa3/AA-) were unchanged over the morning at 99.92 in the secondary market. The company released its first-quarter fiscal 2018 earnings results on Friday.

The Cincinnati-based consumer products company priced $750 million of the 10-year notes on Aug. 9 at 99.793 to yield 2.874%, or a spread of 63 bps over Treasuries.

In the broader high-grade bond market, secondary trading volume totaled $18.9 billon on Thursday, compared to $20.52 billion on Wednesday, $18.79 billion on Tuesday and $14.27 billion on Monday, according to Trace.

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