Morning Commentary: Honeywell, Wells Fargo prep deals; AT&T widens; Citigroup mostly flat

By Cristal Cody

Eureka Springs, Ark., Oct. 24 – Investment-grade primary action is expected on Monday from issuers including Honeywell International Inc., Bank of New York Mellon Corp. and Wells Fargo & Co.

About $20 billion to $25 billion of supply is forecast for the week, according to market sources.

In the secondary market, AT&T Inc.’s bonds were trading about 10 basis points to 20 bps wider following the company’s weekend announcement that it will acquire Time Warner Inc. in an $85.4 billion cash and stock deal.

Citigroup, Inc.’s 3.2% notes due 2026 were unchanged early Monday but trading about 5 bps to 6 bps better than issuance.

The Markit CDX North American Investment Grade index opened the session 1 bp tighter at a spread of 73 bps.

On Friday, about $12 billion of investment-grade issues were traded, according to Trace.

AT&T softens

AT&T’s 4.125% notes due 2026, quoted on Friday 8 bps weaker at 146 bps bid, were seen early Monday 9 bps wider at 155 bps offered, a market source said.

The company priced a $900 million reopening of the bonds (Baa1/BBB+/A-) 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.

AT&T is a Dallas-based telecommunications company.

Citigroup steady

Citigroup’s 3.2% notes due 2026 traded flat early Monday at 139 bps offered, according to a market source.

The notes (Baa1/BBB+/A) were sold on Oct. 27 in a $3 billion tranche at a spread of 145 bps over Treasuries.

Citigroup is a financial services company based in New York.

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