Delta, TIAA price new issues in 'ideal' market conditions; spreads continue to tighten

By Andrea Heisinger

Omaha, Oct. 4 - Delta Air Lines, Inc. and Teachers Insurance and Annuity Association priced deals Thursday, likely closing out new issuance for the week.

The Delta issue was $1.4 billion of passthrough certificates in three parts, $1.189 billion of them high grade and $220 million high yield.

The $924,408,000 of 6.821% class A certificates priced at par, while the $265,366,000 of 8.021% class B certificates priced at par.

All of the certificates are being sold via Rule 144A.

The $1 billion issue of notes from TIAA was upsized from $500 million where it was launched. It priced at Treasuries plus 95 basis points, tightening from talk of Treasuries plus 100 bps, a market source said.

Full terms of the issue were not available as of press time Thursday.

Quiet Friday expected

It is unlikely there will be any new issues Friday, especially given that the session will be shortened ahead of the full close Monday for the Columbus Day holiday, traders said.

This is despite ideal market conditions.

"There were a couple of things today, but it's been quiet like everyone expected it to be," a market source said.

"Today would have been a good day to get in, because things were trading tighter."

The tone of the market is "decent" with continuing stability, a source said.

The benchmark 10-year Treasury note was sitting at 4.52% early Thursday afternoon.

Secondary tighter

A quiet day in new issues was similar to the tone in the day's secondary market.

Secondary sources reported things were quiet, with issues trading tighter.

This was the case with both parts of Wednesday's issue from Clorox Co. with the 5.45% five-year notes trading at 119 bps bid, 116 bps offered, tightening from the pricing level of Treasuries plus 125 bps. The 5.95% 10-year notes were at 139 bps bid, 135 bps offered, also in from the pricing level of Treasuries plus 145 bps.

Florida Light & Power Co. priced its issue of 5.55% 10-year notes Wednesday at Treasuries plus 100 bps, and they were trading at 94 bps bid, 91 bps offered on Thursday.

A secondary source said the TIAA notes were changing hands at Treasuries plus 93 bps bid, 2 bps tighter than where they came to market.

CDS spreads continued to tighten, more than 10 bps in some cases, a source said.

Bear Stearns & Co. opened at 80/85 bps, compared to 84/89 bps Wednesday and 90/95 bps Monday.

Lehman Brothers opened at 68/73 bps, compared to 74/79 bps Wednesday and 80/85 bps Monday.

Merrill Lynch opened at 52/57 bps, compared to 55/60 bps Wednesday and 68/62 bps Monday.

Morgan Stanley opened at 50/55 bps, compared to 52/57 bps Wednesday and 55/60 bps Monday.

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