Hartford prices $300 million 30-year notes; Fidelity tighter; bank, broker CDS costs rise

By Sheri Kasprzak

New York, April 15 - U.S. corporate primary activity was quiet in the past week, with just $28.5 billion of non-sovereign new issues pricing, said Jody Lurie, corporate credit analyst with Janney Montgomery Scott LLC.

"The 1Q earnings season kick-off at the beginning of last week sent many companies, particularly the banks which report at the start of the season, into blackout periods," Lurie wrote Monday.

"Interestingly, a significant portion of last week's issuance came from high-yield credits. Excluding nonrated and split-rated issuers, 29% of total issuance last week came from high-yield credits, well above the 22% median for each week since January 2011."

Heading up the light day for primary activity, the Hartford Financial Services Group Inc. came to market with $300 million of senior notes.

Lurie noted that a good portion of last week's new issues came from less-frequent issuers.

"We would expect the primary markets to become more active towards the end of the month as earnings season gets under way. During the week, the CDX investment-grade credit default swap index tightened 5 bps from the prior week end. Similarly, the high-yield CDX index rose to 104.5 at Friday close from 103.4 the prior week close," Lurie wrote.

The investment-grade secondary market was also muted on Monday, though spreads were wider overall, one trader said during the session.

"Not a ton of activity," the trader added.

Another trader quoted Fidelity National Information Services Inc.'s recent notes tighter compared to levels seen earlier during Monday's trading.

The Markit CDX Series North American Investment Grade index was 3 bps wider at a spread of 85 bps.

Investment-grade bank and broker credit default swap costs were wider on the session, according to a market source

Bank of America Corp.'s CDS costs were 5 bps wider at 130 bps bid, 140 bps offered. Citigroup Inc.'s CDS costs rose 5 bps to 110 bps bid, 120 bps offered. JPMorgan Chase & Co.'s CDS costs were 3 bps wider at 90 bps bid, 96 bps offered. Wells Fargo & Co.'s CDS costs widened 3 bps to 74 bps bid, 80 bps offered.

Merrill Lynch's CDS costs were 7 bps wider at 115 bps bid, 125 bps offered. Morgan Stanley's CDS costs rose 5 bps to 145 bps bid, 155 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 5 bps to 133 bps bid, 143 bps offered.

Hartford leads pricing

According to an 8-K filed Monday with the Securities and Exchange Commission, the Hartford notes (Baa3/BBB/BBB) were sold through joint bookrunners BofA Merrill Lynch, Credit Suisse USA Securities LLC and J.P. Morgan Securities LLC.

The 4.3% notes are due April 15, 2043. The spread came in at Treasuries plus 145 basis points. The notes were priced at 99.2 to yield 4.348%.

Proceeds will be used for general corporate purposes. The deal is part of the company's capital management plan and its fulfillment of its previously announced intention to issue new long-term senior debt securities.

Based in Hartford, Conn., Hartford is a financial services holding company and parent company for the Hartford Insurance Co.

Fidelity National firms

Fidelity National Information Services' $250 million tranche of 2% five-year notes was quoted 3 bps tighter on the day at 127 bps bid, 122 bps offered, a trader said.

The notes priced at a spread of Treasuries plus 135 bps on Wednesday.

The $1 billion tranche of 3.5% 10-year notes, which sold at 180 bps over Treasuries on Wednesday, traded 2 bps better at 177 bps bid, 172 bps offered.

Fidelity National Information Services is a Jacksonville, Fla.-based banking and payment technologies company.

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