Morning Commentary: Brown-Forman markets notes; AT&T, Time Warner steady headed into court

By Cristal Cody

Tupelo, Miss., March 22 – Brown-Forman Corp. is marketing two tranches of notes due 2025 and 2038 as the lone reported issuer in the deal pipeline early Thursday.

Supply was light in the previous session with one corporate investment-grade bond deal priced.

The Federal Reserve raised the Federal Funds rate by 25 basis points to a 1.5% to 1.75% range on Wednesday.

More than $23 billion of high-grade bonds have priced week to date, coming in just above the $20 billion of supply market sources had forecasted.

Syndicate sources are reporting supply may be light for the remainder of the month due in part to spring break vacations and earnings blackout periods.

Investment-grade secondary market volume also has slowed over the week. On Wednesday, $15.99 billion of bonds were traded, compared to $18.7 billion of bonds on Tuesday and $15.33 billion on Monday, according to Trace data.

Bonds from AT&T Inc. and Time Warner Inc. remain active in secondary trading as the companies head to federal court on Thursday for opening arguments to defend their merger. The Justice Department filed suit in late 2017 to block AT&T’s $85.4 billion cash and stock acquisition of Time Warner.

AT&T’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) were mostly unchanged at 100.25, a source said.

The Dallas-based telecommunications company sold $5 billion of the notes on July 27, 2017 at 99.827 to yield 3.92% and a spread of 160 bps over Treasuries.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) were flat at 91.03 at the start of the day, the source said.

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 135 bps over Treasuries.

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