Citigroup caps $20 billion week with sale; coming holiday week quieter; St. Jude notes firm

By Aleesia Fornia and Andrea Heisinger

New York, March 22 - A sale of short bonds from Citigroup Inc. closed out a productive week in the high-grade bond market on Friday.

The New York-based financial services company sold $1.5 billion of three-year notes in two parts: one with a fixed rate and the other with a floating rate.

A sale of notes due 2018 was announced by Germany's Landwirtschaftliche Rentenbank.

With Passover and the Easter holiday weekend ahead, the coming week is expected to be top heavy and have less volume than in the last few weeks, sources said.

"We have the holidays, so it's looking like $10 [billion] to $15 [billion], more toward the front end," one market source said after the close Friday.

The past week saw a little more than $20 billion of bonds sold, according to Prospect News data, which was at the top end of what was expected.

In secondary market action, a trader quoted St. Jude Medical Inc.'s two-part issue 2 basis points to 7 bps better in Friday's trading, while Westar Energy Inc.'s notes were quoted 1 bp wider from Thursday's close.

Investment-grade bank and brokerage credit default swap costs were unchanged to wider on Friday.

Bank of America Corp.'s CDS costs were unchanged at 120 bps bid, 125 bps offered. Citigroup Inc.'s CDS costs were also unchanged at 102 bps bid, 107 bps offered. JPMorgan Chase & Co.'s CDS costs declined 2 bps to 81 bps bid, 85 bps offered. Wells Fargo & Co.'s CDS costs widened 1 bp to 65 bps bid, 69 bps offered.

Merrill Lynch's CDS costs were flat at 95 bps bid, 105 bps offered. Morgan Stanley's CDS costs declined 1 bp to 132 bps bid, 137 bps offered. Goldman Sachs Group, Inc.'s CDS costs also widened 1 bps to 128 bps bid, 133 bps offered.

Citi sells $1.5 billion

Citigroup sold $1.5 billion of three-year notes (Baa2/A-/A) in two parts, an informed source said.

A tranche of floating-rate notes was added to the trade at the launch, the source said. The size was increased from a planned minimum of $1 billion.

A $650 million tranche of three-year floaters sold at par to yield Libor plus 79 bps.

The second part was $850 million of 1.3% three-year notes priced at 99.882 to yield 1.34% with a spread of Treasuries plus 96 bps.

Whispered guidance was in the Treasuries plus 100 bps to 105 bps range, the source said.

Neither tranche has a call option.

Citigroup Global Markets Inc. was the bookrunner.

The New York-based financial services company sold $1.75 billion of 1.25% three-year bonds on Jan. 3 at Treasuries plus 95 bps.

Rentenbank's five-year issue

Landwirtschaftliche Rentenbank announced a sale of notes due 2018 in a 424B5 filing with the Securities and Exchange Commission.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and TD Securities (USA) LLC are the bookrunners.

The sale is guaranteed by the Federal Republic of Germany.

Proceeds are being used to finance lending activities.

The German development agency for agribusiness is based in Frankfurt.

St. Jude notes firm

St. Jude's $900 million tranche of 3.25% 10-year notes traded at 138 bps bid, 130 bps offered following Thursday's pricing at a spread of Treasuries plus 140 bps.

Meanwhile, the $700 million tranche of 4.75% 30-year bonds, which sold at 165 bps over Treasuries, was quoted at 158 bps bid, 155 bps offered.

The maker of cardiovascular medical devices is based in St. Paul.

Westar notes slightly wider

Westar Energy's $250 million of 4.1% 30-year mortgage bonds was quoted at 92 bps bid, 89 bps offered on Friday.

The notes sold at Treasuries plus 95 bps on Thursday before closing the session at 91 bps bid.

The electric utility is based in Topeka, Kan.

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