Deal action slows; Freddie Mac, Aviation Capital, Stryker price; AT&T, Time Warner weaken

By Cristal Cody

Eureka Springs, Ark., Jan. 12 – Supply in the high-grade bond market stayed fairly light on Thursday with three offerings priced during the session.

“Pretty quiet,” one syndicate source said. “Wasn’t much today.”

Freddie Mac priced $3 billion of 1.5% three-year Reference Notes.

In corporate supply, Aviation Capital Group Corp. brought $1 billion of five-year senior notes to market.

Stryker Corp. sold $500 million of two-year notes.

The week has seen more than $30 billion of issuance following more than $50 billion of bonds priced in the first week of January.

Market activity is slowing in front of the long holiday weekend. The bond markets will be closed on Monday for the Martin Luther King holiday.

Some bond supply is expected following the holiday and before president-elect Donald Trump is inaugurated on Jan. 20.

“We’ll see issuance next week – Tuesday, Wednesday or Thursday are all days when people could come to the market, but things should be quiet tomorrow ahead of the long weekend,” a source said.

The Markit CDX North American Investment Grade index ended mostly unchanged at a spread of 66 basis points.

In the secondary market, bonds from AT&T Inc. and Time Warner Inc. were mostly unchanged on the day but softer from where the notes traded a week ago.

AT&T announced plans in October to acquire Time Warner in an $85.4 billion cash and stock deal expected to close before the end of 2017.

AT&T’s 4.125% notes due 2026 have eased more than 10 bps from where the notes traded on Jan. 5.

Time Warner’s 2.95% notes due 2026 are about 3 bps softer from a week ago.

BNP Paribas’ 3.8% senior non-preferred medium-term notes due Jan. 10, 2024 priced on Jan. 3 were mostly unchanged from where the notes traded in the previous week.

Freddie Mac prices $3 billion

Freddie Mac priced $3 billion of 1.5% three-year Reference Notes at 99.892 to yield 1.537%, a spread of 9.5 bps over three-year Treasuries, according to a news release.

The notes are due Jan. 17, 2020.

Barclays, Citigroup Global Markets Inc. and Nomura Securities International were the lead dealers.

The government-backed mortgage lender is based in McLean, Va.

Aviation Capital sells $1 billion

Aviation Capital Group priced $1 billion of 2.875% five-year senior notes on Thursday at a spread of 115 bps over Treasuries, according to a market source.

The notes due Jan. 20, 2022 (/A/BBB) priced on the tight side of guidance set at 120 bps over Treasuries, plus or minus 5 bps.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. and RBC Capital Markets LLC were the active bookrunners.

Proceeds will be used for general corporate purposes.

Aviation Capital Group, a privately-held subsidiary of Pacific Life Insurance Co., is a global aircraft leasing company based in Newport Beach, Calif.

Stryker brings notes

Stryker priced $500 million of 1.8% two-year notes at 99.979 to yield 1.811% on Thursday, according to an FWP filing with the Securities and Exchange Commission.

The notes due Jan. 15, 2019 (Baa1/A/) priced with a spread of 65 bps over Treasuries.

J.P. Morgan Securities LLC was the bookrunner.

Proceeds will be used for general corporate purposes, including working capital, repaying outstanding commercial paper at maturity, acquisitions, stock repurchases and other business opportunities.

Stryker is a Kalamazoo, Mich.-based medical technology company.

AT&T unchanged

AT&T’s 4.125% notes due 2026 were flat on Thursday at 160 bps bid but have widened from a week ago when the notes were quoted at 146 bps bid, according to a market source.

AT&T (Baa1/BBB+/A-) priced a $900 million add-on to the bonds on May 3 at Treasuries plus 150 bps. The notes originally were sold on Jan. 29, 2016 in a $1.5 billion offering at 195 bps over Treasuries.

The telecommunications company is based in Dallas.

Time Warner flat

Time Warner’s 2.95% notes due 2026 headed out unchanged in the secondary market at 137 bps bid, about 3 bps weaker from a week ago, a market source said.

Time Warner (Baa2/BBB/BBB+) sold $800 million of the notes on May 5 at a spread of 135 bps over Treasuries.

The media and entertainment company is based in New York.

BNP Paribas steady

BNP Paribas’ 3.8% notes due 2024 were seen early Thursday at 147 bps offered, according to a market source.

BNP Paribas sold $1.75 billion of the notes (Baa2/A-/) on Jan. 3 at a spread of 160 bps over Treasuries.

The banking and financial services company is based in Paris.

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