High-grade issuance stills with eyes on Fed; AT&T, Time Warner flat; MetLife tightens

By Cristal Cody

Eureka Springs, Ark., Dec. 14 – High-grade primary issuers stood back on Wednesday with all eyes on the Federal Reserve’s policy rate decision.

Investment-grade credit spreads, Treasuries and stocks weakened following the Federal Reserve's 25-basis-point benchmark rate hike and a surprise hawkish tone, according to market sources.

The Fed said it expects to raise rates three times in 2017.

The Markit CDX North American Investment Grade index eased about 1 bp to a spread of 68 bps.

The three-month Libor yield rose 1 bp over the day to 97 bps.

Investment-grade bonds were mostly steady over the session in secondary trading.

Bonds from Time Warner Inc. and AT&T Inc., which announced plans to acquire Time Warner in October, were generally flat on the day.

AT&T’s 4.125% notes due 2026 headed out flat at 154 bps bid, according to a market source, and Time Warner’s 2.95% notes due 2026 were unchanged at 143 bps bid.

Duke Energy Corp.’s 2.65% senior notes due 2026 traded flat during the session at 106 bps bid, a market source said.

MetLife Global Funding I’s 3.45% notes due 2026 were seen tighter earlier in the session at 92 bps offered. The company priced $1 billion of the 10-year notes (Aa3/AA-/) on Monday at a spread of 97 bps over Treasuries.

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