Toyota prices floaters; primary tone remains sour; Tuesday's Allstate notes firm in trading

By Aleesia Forni and Andrea Heisinger

New York, June 5 - Toyota Motor Credit Corp. sold $350 million of one-year floating-rate notes as other potential issuers of high-grade bonds opted not to brave the market Wednesday.

Conditions were once again soft on the primary side of the market as spreads rose. Companies that do not need immediate financing are holding off to see if conditions improve, a market source said Wednesday.

"I know we had some potentials today, but it was a no go in the morning," the source added.

Because May payroll numbers are coming out early Friday, Thursday will likely be the last opportunity for issuers to tap the market for the week.

A report out Wednesday from S&P Dow Jones Indices showed a decline in May for a high-grade bond index.

Meanwhile, the preferred stock market had some activity.

Allstate Corp. followed up its $1 billion sale of notes on Tuesday with a $250 million offering of series A noncumulative perpetual preferred stock on Wednesday.

The size was increased from $200 million.

"It's doing well," a trader said at midday. "Retail is putting it away."

The paper was trading at $24.55 in the midday gray market.

A market source said he was "surprised they could get the deal done" considering the less-than-stellar market conditions.

He saw the securities trade between $24.60 and $24.70 in the gray market.

The Markit CDX Series 20 North American Investment Grade index was 4 basis points wider on the day at a spread of 86 bps.

Despite a mostly weak tone, the high-grade secondary bond market saw Allstate's new deal from Tuesday trading tighter late Wednesday.

"Not seeing much flow on either issue," one market source said of the two-part deal.

Toyota's floaters

Toyota Motor Credit sold $350 million of one-year floating-rate medium-term notes, series B, at par to yield Libor minus 1 bp, according to an FWP filing with the Securities and Exchange Commission.

The agents were BofA Merrill Lynch and RBC Capital Markets LLC.

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

Allstate does preferreds

Allstate sold $250 million of 5.625% series A fixed-rate noncumulative perpetual preferred stock, according to a prospectus filed with the SEC.

Price talk was 5.625% to 5.75%, a trader said.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

The Northbrook, Ill.-based insurance company will apply to list the new securities on the New York Stock Exchange under the ticker symbol "ALLPA."

Proceeds will be used to fund a tender offer and for general corporate proceeds.

S&P shows yield rise

The S&P U.S. Issued Investment Grade Corporate Bond index was down 2.24% in May, according to a report out from the ratings agency on Wednesday.

As with Treasuries, yields continued upward throughout the past month as the yield to worst of this index widened by 28 bps to 2.73% from 2.46%.

The Dow Jones Equal Weight U.S. Issued Corporate Bond index, a liquidity strategy index, did not perform as well as the broader corporate index, returning negative 2.54%, according to the report.

Allstate firms

One trader quoted Allstate's $500 million tranche of 3.15% 10-year notes at 100 bps bid, 96 bps offered.

The issue was quoted at 97 bps offered earlier during the session following pricing at a spread of Treasuries plus 102 bps on Tuesday.

Meanwhile, the $500 million tranche of 4.5% 30-year bonds was quoted at 121 bps bid, 118 bps offered.

A source at another desk had quoted the notes at 121 bps offered at midday.

The bonds were sold at Treasuries plus 122 bps.

The holding company for insurance subsidiaries is based in Northbrook, Ill.

Stephanie N. Rotondo contributed to this review

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