Toyota Motor Credit sells debt as earnings, volatility keep others away; Carnival CDS widen

By Andrea Heisinger and Cristal Cody

New York, Jan. 17 - The high-grade bond market began the short week quietly on Tuesday with many issuers unable or unwilling to price debt.

Toyota Motor Credit Corp. sold $130 million of two-year floating-rate debt, making it the only straight corporate deal of the day.

Fourth-quarter earnings announcements continued with Citigroup Inc. and Wells Fargo & Co. at different ends of the spectrum. They followed JPMorgan Chase & Co., which announced Q4 and 2011 earnings on Friday and sold $3 billion of paper afterwards.

Citigroup saw its Q4 earnings fall 11%, to $1.16 billion in 2011 from $1.31 billion in 2010. The company did earn a profit of $11.3 billion for 2011, but that was overshadowed by its quarterly performance.

Wells Fargo had a more positive quarter, showing an increase of 20%, to $4.1 billion from the 2010 Q4 earnings of $3.4 billion.

Additional big bank earnings releases are ahead, with Goldman Sachs Group Inc. announcing on Wednesday and Bank of America Corp. on Thursday.

Sources had predicted a slow week with between $5 billion and $10 billion of volume, which was less than half of the previous week's deals.

"There was a lot of bad news out of Europe over the weekend," a source said. "Estimates weren't even that high for the week, so it's not too surprising."

There was talk that Samsung Electronics could price $1 billion of five-year debt to help finance expanded production at its U.S. chip-making facility.

Syndicate sources said they hadn't heard any details or timing on the deal.

Activity was quiet, but bonds traded better over the day, sources said.

The Markit CDX Series 17 North American investment-grade index firmed 3 basis points to a spread of 113 bps on Tuesday from Friday's session.

Bank and financial paper was in 5 bps to 10 bps. JPMorgan Chase & Co.'s notes due 2022 priced late on Friday traded 10 bps better on Tuesday.

Bonds in the telecom sector also traded 5 bps to 10 bps better in the secondary market, led by Comcast Corp.

Carnival Corp.'s stock dropped 14% and its credit default swaps widened on Tuesday in the first market day since the cruise company's ship wrecked off the coast of Italy on Friday. Miami-based Carnival's CDS widened 25 bps.

"Rarely see the bonds," the trader said.

Overall trading volume was about $10 billion over the day.

Treasuries stayed better on Tuesday with yields near record lows. The 10-year note yield fell 1 bp to 1.85%. The 30-year bond yield dropped to 2.9% from 2.91%.

Toyota's short floaters

Toyota Motor Credit priced $130 million of two-year medium-term floating-rate notes (Aa3/AA-/) at par to yield Libor plus 40 bps, according to FWPs with the Securities and Exchange Commission.

Morgan Stanley & Co. LLC and RBC Capital Markets LLC were bookrunners.

The U.S. funding arm of Toyota is based in Torrance, Calif.

JPMorgan firms

JPMorgan Chase's 4.5% notes due 2022 firmed to 260 bps bid, 255 bps offered on Tuesday, a trader said.

The issue (Aa3/A/AA-) was sold on Friday in a $3 billion offering at Treasuries plus 270 bps.

The financial services company is based in New York City.

Comcast tightens

Comcast's 5.15% senior notes due 2020 firmed to 125 bps bid, 115 bps offered, a trader said on Tuesday.

"That's 10 better on the day," the trader said.

Comcast sold the notes in a $1.4 billion offering on Feb. 24, 2010 at 147 bps over Treasuries.

The telecommunications company is based in Philadelphia.

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