Dominion, Energen, Public Service Colorado tap market; new bonds firm 2 bps-4 bps in trading

By Andrea Heisinger and Cristal Cody

New York, Aug. 2 - The high-grade bond market had a burst of new deals on Tuesday after it became clear that the debt ceiling bill would be passed ahead of the default deadline.

Small sales came from Dominion Resources, Inc., Energen Corp. and Public Service Co. of Colorado.

Dominion had the largest deal of the day with $500 million of 30-year notes. They were priced at the tightest end of talk.

There was a $250 million sale of 30-year mortgage bonds from Public Service Co. of Colorado. The utility plans to repay short-term debt with the proceeds.

Energy holding company Energen sold an upsized $400 million of 10-year notes. The deal size was increased by $50 million.

MF Global Holdings Ltd. is planning a $300 million sale of five-year notes with a coupon caveat attached. The coupon will be increased by 100 basis points if the company's chief executive officer is appointed to a federal position.

The bond market echoed moves by equities after President Barack Obama signed the bill raising the debt ceiling into law, averting a default on U.S. debt.

"I think we maybe saw a bump, but then we backtracked a little bit," a syndicate source said after the close.

Issuers had lined up at the end of Monday, anticipating the passage of the bill, the source said. A successful sale from Lorillard Tobacco Co. that was several times oversubscribed gave some potential issuers a needed boost.

There are more deals expected in the next day or two, a second syndicate source said.

"I think it will be active," he said. "We had a couple of calls, and we're hearing away that there are others. Nothing blockbuster."

In the secondary market, the new bonds that priced on Tuesday traded 2 bps to 4 bps tighter, sources said.

Overall trading volume climbed nearly 25% to more than $11 billion on Tuesday.

The Markit CDX Series 15 North American High Grade index eased 3 bps to a spread of 99 bps on Tuesday, according to Markit Group Ltd.

Treasuries jumped on weaker consumer spending data and the debt ceiling bill. The 10-year Treasury note yield fell to 2.61% from 2.75%. The 30-year bond yield dropped to 3.91% from 4.08%.

Dominion's 30-year

Dominion Resources priced a $500 million issue of 4.9% 30-year series C senior bonds on Tuesday at a spread of 110 bps over Treasuries, said a source away from the deal.

They were priced at the tight end of guidance in the 115 bps area, plus or minus 5 bps.

The bonds (Baa2/A-/BBB+) were priced at 98.471 to yield 4.999%. They have a make-whole redemption at 20 bps over Treasuries.

The bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp. and RBC Capital Markets LLC.

Proceeds are being used for general corporate purposes including short-term debt replacement including commercial paper.

Soon after pricing, the bonds due 2041 were seen tighter at 108 bps bid, 106 bps offered in the secondary market, a trader said. Going out, the notes firmed on the offer side to 108 bid, 105 offered, another trader said.

The energy production and transportation company is based in Richmond, Va.

Energen upsizes

Energen sold an upsized $400 million of 4.625% 10-year senior notes (Baa3/BBB) at a spread of Treasuries plus 200 bps, a source close to the deal said.

The size was increased from $350 million, a source said.

The bookrunners were Bank of America Merrill Lynch and Wells Fargo Securities LLC.

Proceeds will be used to repay amounts under a revolving credit facility and for general corporate purposes.

In the secondary market, the notes due 2021 traded at 198 bps bid, 195 bps offered, according to a trader.

The energy holding company is based in Birmingham, Ala.

Public Service's bonds

Public Service Co. of Colorado priced $250 million of 4.75% 30-year first mortgage bonds, series 22, (A2/A/A) to yield Treasuries plus 78 bps, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were BNP Paribas Securities Corp., Credit Suisse Securities LLC and Mizuho Securities USA Inc.

Proceeds are being used to repay short-term debt incurred to fund daily operational needs and for general corporate purposes.

The notes were stronger in the secondary market, firming to 74 bps bid, 73 bps offered in the late afternoon, a trader said.

The electric utility is based in Denver.

MF Global plans debt

MF Global Holdings announced a $300 million sale of five-year notes (Baa2/BBB-) with a possibility of a coupon increase tied to the company's CEO, market sources said.

There is a covenant that the coupon will increase by 100 bps if CEO Jon Corzine is appointed to a federal position by the president and a Senate confirmation is done prior to July 1, 2013. The interest rate can also be adjusted if the company's debt rating is downgraded.

Jefferies & Co., Inc. is the bookrunner.

Proceeds will be used to repay at least $100 million of outstanding debt under a liquidity facility and for general corporate purposes including working capital for broker-deal subsidiaries.

The commodity and derivative broker is based in New York.

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