AT&T Inc. (NYSE:T) spent a quiet session on Friday after the rip roaring rally on Thursday and finished the session almost flat with a mild loss of 0.64%. The volume was lower compared to the previous session too though at 42 million, it remained considerably higher than the daily average of 26.5 million.
On Thursday, AT&T Inc. (NYSE:T) made one of the biggest deals in the form of a $17.5 billion bond offering to fund its long awaited deal to acquire DIRECTV (NASDAQ:DTV), which is the third largest on record in corporate debt offering. The market showed a lot of interest on the bonds as orders came for $68 billion, about four times the offered amount, which helped to shear about $10 million in the yearly interest charges from the deal. The hunger for yield was evident as the market gulped down the huge offering with much ease and looked quite willing to pay for quality names.
The buyers of the bond were attracted by the relatively higher interest compared to the existing debt of the company and the maturity period of 5-31 years. Out of this basket, a 31-year bond will return around 4.77% compared to the 10 year bond that will pay about 3.46%.
On the other hand, if the merger with DIRECTV (NASDAQ:DTV) fails to be realized by the end of the current year, then AT&T Inc. (NYSE:T) will buy back some of its bonds at first rate but the company feels hopeful about the final approval by the Federal Communications Commission and possible completion by the end of this quarter.
Technically, the price of the stock has been in a contraction phase for the last 10-12 months, suggesting a completion of volatility. This condition begs for a quick resolution in the form of a breakout very soon. The medium term trend will be decided on a break beyond the range of $32-$35.