Morning Commentary: Primary action thins; AT&T offers notes; Protective Life eyed

By Cristal Cody

Tupelo, Miss., Aug. 16 – AT&T Inc. is offering floating-rate notes due 2024 in the primary market on Thursday.

Otherwise, activity in the high-grade bond market was mostly quiet over the morning.

Protective Life Corp. is planning to price 10-year fixed-rate senior notes (A-), according to a ratings report from S&P Global Ratings on Thursday.

High-grade issuers have priced more than $24 billion of bonds week to date. Syndicate sources had expected about $25 billion to $30 billion of supply for the week.

Volume slowed on Wednesday with South Carolina Electric & Gas Co. as the lone reported corporate bond issuer in the high-grade primary market following heavy issuance on Monday and Tuesday.

“With 9.0 [basis points] of average new issue concession coupled with a strong 5.6 bps of average break performance, the overall net performance of new issues this week is at a healthy [plus] 3.4 bps,” according to a BofA Merrill Lynch research report released on Thursday. “The recent new issues are trading 3.4 bps tighter on average from pricing spreads.”

United Technologies Corp.’s senior notes (Baa1/BBB+) that priced as part of an $11 billion seven-part offering on Monday have traded about 4 bps to 5 bps tighter in the secondary market, a source said.

McDonald’s Corp.’s senior medium-term notes (Baa1/BBB+) that priced as part of a $1.8 billion three-tranche deal on Monday have improved about 3 bps from issuance in secondary trading.

Secondary trading volume has been mostly lighter this week as many market participants are out for end-of-summer vacations. On Wednesday, $14.91 billion of investment-grade bonds were traded, compared to $16.89 billion on Tuesday and $12.95 billion on Monday, according to Trace.

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