AT&T brings $17.5 billion in third-largest offering ever; Citigroup sells $5 billion notes

By Stephanie Rotondo and Sheri Kasprzak

New York, April 23 – It was a big day for AT&T Inc. Not only did the telecommunications company post solid first-quarter earnings Thursday, it also completed the third-largest investment-grade offering in history, behind a $49 billion Verizon Communications Inc. deal and Actavis Funding SCS’s $21 billion sale.

The $17.5 billion offering included $3 billion of five-year notes at Treasuries plus 110 basis points, $750 million of five-year floating-rate notes, $2.75 billion of seven-year notes at Treasuries plus 130 bps, $5 billion of 10-year notes at Treasuries plus 150 bps, $2.5 billion of 20-year notes at Treasuries plus 190 bps and $3.5 billion of 31-year notes at Treasuries plus 215 bps.

The joint bookrunners for the deal were BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

At day’s end, a market source saw the five-year floating rate notes at 83 bps bid, 80 bps offered. The seven-years were pegged at 120 bps bid, 117 bps offered and the 10-years at 141 bps bid, 138 bps offered.

The 30-year paper was bid for at 205 bps, and the 20-year was quoted at 180 bps bid, 177 bps offered.

Earnings up 0.3%

Elsewhere at AT&T, first-quarter earnings were up 0.3% at $32.6 billion, said a form 8-K filed Thursday with the Securities and Exchange Commission.

These results reflect increased revenues from wireless devices sold under AT&T Next and growth in the company’s AT&T U-verse and were offset by decreased wireless service revenues, continued decline in voice and data products and loss of revenues from the company’s October 2014 sale of Connecticut operations.

Citigroup brings $5 billion

Also during the session, Citigroup Inc. sold $5 billion of notes (Baa2/A-/A), said a term sheet filed Thursday with the Securities and Exchange Commission.

The investment bank sold $2.5 billion of senior notes due April 27, 2018, $1.5 billion of senior notes due April 27, 2025 and $1 billion of floating-rate senior notes due April 27, 2018.

The $2.5 billion notes have a 1.7% coupon priced at 99.683 to yield 1.809%.

The $1.5 billion notes have a 3.3% coupon priced at 99.814 to yield 3.322%.

The $1 billion notes bear interest at three-month Libor plus 69 bps.

Citigroup Global Markets Inc. was the sole book manager.

Banks, brokers CDS steady

Banks and brokers CDS costs held steady in Thursday trading, according to a market source.

Bank of America Corp.’s CDS was seen at 62 bid, 65 offered. Citigroup meantime closed at 72 bid, 75 offered.

In JPMorgan Chase & Co.’s CDS, things were steady at 60 bid, 63 offered. Wells Fargo & Co. finished at 41 bid, 44 offered.

Among brokers, Merrill Lynch was pegged at 64 bid, 69 offered, while Morgan Stanley & Co. Inc. was placed at 72 bid, 75 offered.

Goldman Sachs Group Inc. ended at 78 bid, 81 offered.

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