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MarketScreener Homepage  >  Equities  >  Nyse  >  AT&T Inc.    T

AT&T INC.

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Delayed Quote. Delayed Nyse - 04/09 06:30:00 pm
30.73 USD   +2.81%
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Corporate Bond Issuance Strong in Weak Market

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06/11/2012 | 04:35pm EDT

--Eight companies sell $7 billion of new bonds

--Deals featured wide range of ratings and quality

--Demand holds up while broader market deteriorated

Eight companies sold nearly $7 billion of bonds Monday despite the early-morning market rally fizzling out in the afternoon.

The debt ranged from triple-A-rated, two-year notes to triple-B-rated, 30-year bonds, indicating investor demand is holding up for all kinds of investment-grade paper.

"Despite the recent volatility and news flow from Europe, there has been by and large little interruption in the new-issue market," said Jesse Fogarty, portfolio manager at Cutwater Asset Management.

The flood of issuance can be read in a negative light too, however. Fogarty said concerns the European flare-up could "turn into Armageddon" has companies seeking to lock-in low-rates now, even if the extra risk premium, or spread, is wider than typical.

Spain's official call for banking sector financial assistance originally had the market in rally mode, but uncertainty over how the bailout would be implemented caused investors to pull back. Equities fell, corporate-bond sentiment weakened, and Treasurys gained.

That kept offered yields close to original pricing guidance as high-grade companies including AT&T Inc. (>> AT&T Inc.), CBS Corp. (>> CBS Corporation) and Symantec Corp. (SYMC), sold $6.95 billion in bonds Monday.

"There were more deals than expected," said Vincent Murray, head of fixed-income syndicate at Mizuho Securities, in the early afternoon. "Everybody got in right away. It's all going to get done--the investors are just charging a little more."

The $6.95 billion in volume marks a strong start to a week that was only looking to absorb between $10 billion and $15 billion. Last week, a greater-than-expected $15.4 billion was sold, according to data provider Dealogic, as issuers and investors alike were encouraged by the performance of newly issued bonds.

AT&T led Monday's market with a $2 billion offering of five- and 10-year maturities. The five-year notes were priced at 1.741%, or 1.05 percentage points over Treasurys, and the 10-year notes--a reopening of an existing 3% coupon sale--were priced to yield 2.948%, a spread of 1.35 points.

Mr. Murray noted the short-dated pieces of new deals garnered more attention, signaling that investors are seeking safer assets.

Still, weakening sentiment didn't prevent CBS, a triple-B rated issuer, from increasing the size of its debt offering by $100 million to $900 million. It sold five- and 30-year bonds to yield 2.191% and 5.018%, respectively, at spreads to Treasurys of 1.5 and 2.3 points. The media company is using the proceeds to redeem higher-coupon debt.

Symantec, the security software company, sold $1 billion in five- and 10-year maturities to repay some convertible notes. They paid respective yields of 2.791% and 4.048%, or spreads to Treasurys of 2.1 and 2.45 percentage points.

UnionBanCal Corp., a California-based bank holding subsidiary of Mitsubishi UFJ Financial Group Inc. (MTU), sold $900 million in five- and 10-year maturities at respective yields of 2.189% and 3.596%, or spreads of 1.50 and 2.0 points.

Companies with smaller deals included NiSource Inc. (>> NiSource Inc.), Newell Rubbermaid Inc. (>> Newell Rubbermaid Inc.) and PPL Corp. (>> PPL Corporation). Also, New York Life Insurance Co. sold two-year floating-rate notes, pricing them at 0.12 percentage point over the three-month London interbank offered rate. The deal, with a Aaa rating from Moody's Investors Service, was popular enough that the size doubled to $500 million.

Trading in the secondary market was strong in the morning, but spreads jumped out as equities tumbled in late trading. According to MarketAxess, eight of the 10 most actively traded bonds underperformed Treasurys. The risk premium on Goldman Sachs 5.75% bonds due 2022, for instance, tightened 0.05 percentage point in the morning but closed the day 0.1 points wider at 3.60 points.

The picture was even less favorable in Markit's CDX North America Investment Grade Index, a proxy for risk sentiment based on the cost of protecting against issuer defaults.

It weakened 3.5% in midafternoon trading, versus a 2% strengthening early in the morning. A more telling sign of where the market is at will be how these newly issued bonds trade later in the week.

Write to Patrick McGee at patrick.mcgee@dowjones.com

Stocks mentioned in the article
ChangeLast1st jan.
AT&T INC. 2.81% 30.73 Delayed Quote.-21.15%
MITSUBISHI UFJ FINANCIAL GROUP, INC. 0.25% 408 End-of-day quote.-1.02%
NISOURCE, INC. 4.36% 26.58 Delayed Quote.-8.51%
NORTONLIFELOCK INC. -1.07% 19.37 Delayed Quote.-24.10%
PPL CORPORATION 3.45% 26.7 Delayed Quote.-23.17%
THE GOLDMAN SACHS GROUP, INC. 4.13% 184.26 Delayed Quote.-19.58%
VIACOMCBS INC. 4.84% 16.56 Delayed Quote.-60.54%
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Financials (USD)
Sales 2019 181 B
EBIT 2019 30 388 M
Net income 2019 16 227 M
Debt 2019 155 B
Yield 2019 6,66%
P/E ratio 2019 14,0x
P/E ratio 2020 11,8x
EV / Sales2019 2,07x
EV / Sales2020 2,04x
Capitalization 220 B
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Technical analysis trends AT&T INC.
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
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Mean consensus HOLD
Number of Analysts 33
Average target price 37,01  $
Last Close Price 30,73  $
Spread / Highest target 52,9%
Spread / Average Target 20,4%
Spread / Lowest Target -34,9%
EPS Revisions
Managers
NameTitle
Randall L. Stephenson Chairman & Chief Executive Officer
John T. Stankey President & Chief Operating Officer
John J. Stephens Chief Financial Officer & Senior Executive VP
Laura D'Andrea Tyson Independent Director
Matthew K. Rose Lead Independent Director
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