Morning Commentary: Investment-grade supply light; Fannie Mae markets notes; AT&T improves

By Cristal Cody

Tupelo, Miss., April 11 – The investment-grade bond market stayed mostly quiet at the start of Wednesday’s session with no corporate issuers announcing deals.

Fannie Mae announced plans to price three-year Benchmark Notes in an offering expected to close on Friday.

Deal volume week to date totals more than $6.5 billion.

Light supply is expected by market sources over the week with about $10 billion to as much as $17 billion of issuance forecast.

Bank and financial companies are mostly in blackout ahead of earnings releases. Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. post first-quarter earnings results on Friday.

In the meantime, new bond offerings are expected to follow roadshows being held by Syngenta AG and Ausgrid Finance Pty Ltd., according to market sources.

Elsewhere, secondary trading picked up on Tuesday with $19.19 billion of bonds traded, compared to $14.67 billion on Monday, according to Trace.

In the secondary market over the morning, AT&T Inc.’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) improved a nickel to 100.90, a source said.

Dallas-based AT&T sold $5 billion of the notes on July 27, 2017 at 99.827 to yield 3.92%, or 160 basis points over Treasuries.

The Justice Department is set to wrap its antitrust suit to stop AT&T’s $85.4 billion cash and stock acquisition of Time Warner Inc. with the final government witness on Wednesday.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) traded last on Tuesday at 92.97 in the secondary market.

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 Treasuries plus 135 bps.

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