Investment-grade supply quiets; Fannie Mae offers notes; AT&T firms; Dollar Tree steady

By Cristal Cody

Tupelo, Miss., April 11 – Deal action stayed fairly quiet in the high-grade bond market on Wednesday.

No primary action was reported in the U.S. market during the session, while the Canadian primary market saw supply.

CCL Industries Inc. priced C$300 million of 3.864% 10-year senior notes (Baa2/BBB-/) at par to yield a spread of 165 basis points over the interpolated Government of Canada bond curve on Wednesday.

Fannie Mae announced plans at the start of the day to price three-year benchmark notes. The offering is expected to close on Friday.

Week to date, issuers have priced more than $6.5 billion of investment-grade rated bonds.

Volume was expected to be light with the release on Wednesday of the minutes from the Federal Reserve’s March monetary policy meeting and bank and financial companies set to exit blackout periods. On Friday, Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. post first quarter earnings results.

Syndicate sources forecasted about $10 billion to as much as $17 billion of supply for the week.

The Markit CDX North American Investment Grade 30 index ended mostly unchanged at a spread of 63 bps.

In the secondary market, bank and financial paper traded mostly flat to about 5 bps softer, a source said.

AT&T firms, Time Warner flat

In other secondary trading, AT&T Inc.’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) firmed 2 bps on Wednesday after softening 5 bps in the previous session, a market source said.

The notes headed out 2 bps tighter at 104 bps bid.

Dallas-based AT&T sold $5 billion of the notes on July 27, 2017 at a spread of 160 bps over Treasuries.

The Justice Department was presenting its final government witness on Wednesday in its antitrust suit to stop AT&T’s $85.4 billion cash and stock acquisition of Time Warner Inc.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) were flat on the day at 121 bps bid, the source said.

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

Dollar Tree unchanged

In new issue secondary trading, Dollar Tree, Inc.’s senior notes (Baa3/BBB-/) priced a week ago were mostly unchanged on the day, a source said.

Dollar Tree’s 4% notes due May 15, 2025 were steady at 116 bps bid. The $1 billion tranche priced on Thursday at a Treasuries plus 125 bps spread.

The company’s 4.2% notes due May 15, 2028 headed out flat at 139 bps bid. The Chesapeake, Va.-based discount retailer sold $1.25 billion of the 10-year notes in the offering last week at a spread of 140 bps over Treasuries.

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