Bank of America, Dominion Gas, CSX price; JPMorgan, Wrigley firm as market improves

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 17 - Bank of America Corp., Dominion Gas Holdings LLC and CSX priced new high-grade bond issues on Thursday as activity picked up following the deal to reopen the government and avoid a debt default.

Bank of America sold the session's largest deal, pricing $3 billion of five-year notes in fixed- and floating-rate tranches.

The company priced $500 million of floating-rate notes at par to yield Libor plus 104 basis points and $2.5 billion of 2.6% notes at Treasuries plus 128 bps.

In other primary action, Dominion Gas priced $1.2 billion of senior notes in three tranches.

The sale included $400 million of 1.05% three-year notes priced with a spread of 45 bps over Treasuries and $400 million of 3.55% 10-year notes priced at Treasuries plus 97 bps.

Dominion also sold $400 million of 4.8% 30-year bonds at 112 bps over Treasuries.

Also on Thursday, CSX came to the primary with $500 million of 3.7% 10-year notes sold at Treasuries plus 113 bps.

The notes sold at the tight end of talk.

JPMorgan Chase & Co. gave details on Thursday of its recent $500 million tap of its existing 5.625% bonds 2043.

The add-on sold with a spread of Treasuries plus 190 bps.

Roughly $11 billion of new paper has been issued so far during the week, slightly higher than predictions of a $10 billion week.

The Markit CDX North American Investment Grade series 21 index firmed 3 bps to a spread of 71 bps.

"Everything's a little bit better," a trader said.

JPMorgan's 5.625% notes due 2043 tightened 7 bps in secondary trading, while the 3.7% notes due 2023 that CSX priced traded wrapped around issuance.

WM. Wrigley Jr. Co.'s $3 billion of notes sold on Wednesday traded another 1 bp to 2 bps better from earlier in the day, according to traders.

"It was an attractive deal," one source said. "And everything is moving in with everything else."

In other trading, Time Warner Cable Inc.'s bonds (Baa2/BBB/BBB) traded "a little better," a source said. The company's stock rose 1% over the session.

BofA sells $3 billion

Thursday's high-grade primary market saw Bank of America price $3 billion of senior notes (Baa2/A-/A) due 2019 in fixed- and floating-rate tranches, according to an informed source.

The sale included $500 million of five-year floating-rate notes sold at par to yield Libor plus 104 bps.

There was also $2.5 billion of 2.6% notes due 2019 priced at Treasuries plus 128 bps, or 98.983, to yield 2.604%.

Proceeds will be used for general corporate purposes.

The financial services company is based in Charlotte, N.C.

Dominion Gas prices tight

Dominion Gas came to market on Thursday with a $1.2 billion sale of senior notes in three tranches, according to a market source.

There was $400 million of 1.05% three-year notes sold at 99.964 to yield 1.062%, or 45 bps over Treasuries.

A $400 million tranche of 3.55% 10-year notes was priced with a spread of Treasuries plus 97 bps.

Pricing was at 99.882 to yield 3.564%.

There was also $400 million of 4.8% 30-year bonds priced at Treasuries plus 112 bps, or 99.762, to yield 4.815%.

All three tranches were sold at the tight end of talk.

The notes were sold under Rule 144A and Regulation S.

RBC Capital Markets LLC, RBS Securities Inc. and Scotia Capital (USA) Inc. were the joint bookrunners.

Dominion Gas is a wholly owned subsidiary of Richmond, Va.-based energy producer and transporter Dominion Resources Inc.

CSX new issue

Meanwhile, CSX sold $500 million of 3.7% senior notes due 2023 with a spread of Treasuries plus 113 bps, according to a syndicate source and a filing with the Securities and Exchange Commission.

Pricing was at 99.924 to yield 3.709%

The notes sold at the tight end of talk.

Going out, CSX's notes traded at 113 bps bid, 110 bps offered, according to a trader.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, including repayment of the company's 5.3% notes due February 2014.

CSX was last in the bond market with an $800 million sale of 4.1% senior notes due 2044 priced at 115 bps over Treasuries on Oct. 17, 2012.

The transportation company is based in Jacksonville, Fla.

JPMorgan's subordinated bonds

JPMorgan Chase sold a $500 million a tap of its existing 5.625% subordinated bonds (A3/A-/A) due Aug. 16, 2043 with a spread of Treasuries plus 190 bps, according to an FWP filing with the SEC.

Pricing was at 99.591 to yield 5.653%.

The notes firmed to 183 bps bid, 178 bps offered, a trader said.

JPMorgan was the bookrunner.

The financial services company is based in New York City.

Wrigley better

Wrigley's new notes (Baa2/BBB/) traded another 1 bp to 2 bps better in the late afternoon from the morning session, a trader said.

The 2.9% notes due 2019 were quoted at 132 bps bid, 130 bps offered headed out on Thursday.

The notes traded earlier in the day at 132 bps offered.

Wrigley sold $750 million of the six-year notes at Treasuries plus 155 bps on Wednesday as part of a five-tranche offering.

The candy and food products company is based in Chicago.

Time Warner Cable better

Time Warner Cable's 8.25% notes due 2019 firmed 3 bps to 4 bps on the day to 335 bps bid, 330 bps offered, a trader said.

"They're performing nicely," the trader said. "The rest of the curve is 2 to 3 [bps] better."

The New York City-based broadband communications company sold $2 billion of the notes in 2009 at a spread of 570 bps over Treasuries.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS costs declined on Thursday, according to a market source.

Bank of America Corp.'s CDS costs firmed 4 bps to 92 bps bid, 96 bps offered. Citigroup Inc.'s CDS costs tightened 4 bps to 83 bps bid, 87 bps offered. JPMorgan Chase & Co.'s CDS costs tightened 2 bps to 79 bps bid, 83 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 55 bps bid, 59 bps offered.

Merrill Lynch's CDS costs tightened 4 bps to 91 bps bid, 96 bps offered. Morgan Stanley's CDS costs firmed 6 bps to 117 bps bid, 121 bps offered. Goldman Sachs Group, Inc.'s CDS costs tightened 4 bps to 116 bps bid, 120 bps offered.

Paul Deckelman contributed to this review

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