US IG WRAP-Telstra lone deal as market digests supply

By Danielle Robinson

NEW YORK, March 30 (IFR) - Australian telecom giant Telstra was the only issuer Monday, coming with a US$1bn offering of 10-year securities as the high-grade market got the holiday-shortened week off to a slow start.

Telstra's strong A2/A rating, and the fact that it hasn't been in the market in four years, helped bookrunners Barclays (LSE: BARC.L - news) , Citigroup (NYSE: C - news) and JP Morgan launch the deal some 15bp tighter than where Verizon (NYSE: VZ - news) and AT&T (Sao Paolo: ATTB34.SA - news) trade.

The deal launched at 118bp, 17-22bp tighter than initial price thoughts of 135bp-140bp. This compared with a G spread of around 133bp on both AT&T's 3.9% March 2024s (A3/A-/A) and Verizon's 3.5% November 2024s (Baa1/BBB+/A).

The trade is set to price competitively to Vodafone (A3/A-/A-), which had 2.95% February 2023s - two years shorter in maturity - at around G+113bp early this morning, according to levels supplied by MarketAxess.

Syndicate desks are not expecting much more than US$10-US$15bn this week, as investors look to digest the record onslaught of supply.

"To be a little slow is not a bad thing," one syndicate manager told IFR. "The market could benefit from this."

Some bankers are advising borrowers to hold off for a week if they can.

"You could get something done if you had to, but I am not pounding the table saying there's a great window of opportunity here," said the syndicate manager.

Telstra's deal takes March's tally to US$149bn, the biggest month - and quarter - of investment-grade issuance ever with one day still to go.

(Reporting By Danielle Robinson; Editing by Shankar Ramakrishnan and Marc Carnegie)