Sempra, John Deere Capital price; ING announces hybrid issue; secondary sluggish on oil, new issues

By Andrea Heisinger

Omaha, June 9 - Market conditions held enough over the weekend for a few new investment-grade issues to price Monday, including deals from Sempra Energy and John Deere Capital Corp.

The outlook for the week's issuance volume remains positive, despite a negative ending to last week and more sour headlines Monday.

An expected write-down announcement from Lehman Brothers happened Monday, with a somewhat larger than expected $2.8 billion loss for the second quarter.

This will do little to impact any issuers intending to come into the market this week, a source said, just as it did not leave the market barren Monday.

"Stuff that's supposed to go will go, and anything else won't," he said. "We have a very humble calendar this week."

Lehman steady

The secondary market remained quiet with the Lehman Brothers doing alright in light of their earnings announcement.

"Lehman papers were doing pretty well," a secondary source said. "There weren't really any new issues today to watch."

Sempra at wide end

The $500 million issue from Sempra Energy was one of the few that were seen active in secondary trading Monday.

The issue of 6.15% 10-year senior unsecured notes priced at 99.962 to yield 6.155% with a spread of Treasuries plus 215 basis points.

This was at the wide end of price talk of 210 to 215 bps, a source close to the deal said.

The issue was unremarkable, he said, adding that it wasn't a huge deal.

Bookrunners were J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co., Inc.

John Deere Capital priced a $600 million issue of three-year floating-rate notes at par to yield three-month Libor plus 75 bps.

Banc of America Securities LLC and Citigroup ran the books.

Another issue came from HSBC Finance Corp. with $102.222 million senior notes in two tranches.

ING announces

ING Groep NV announced in a Securities and Exchange Commission filing it will sell perpetual hybrid capital securities.

Pricing is expected on Tuesday, a source said.

Citigroup, ING Financial Markets, Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co., Inc. are bookrunners.

Financials expected in primary

This week is expected to have an increased issuance over last week's total of more than $13 billion.

Sources said the expected increase is due to some financial names going into blackout in a couple of weeks.

However, issuance won't compete with the record weeks in May as the market is generally weaker and supply is somewhat diminished.

"I don't think anyone who hadn't planned on it has their mouth watering to get into the market right now," a source said.

Lehman's expected capital raising came Monday in the form of convertible preferred stock and common stock.

Issuance should pick up Tuesday if the open is stable, a source said.

The secondary market remains in the shadow of the primary.

"Ever since the new issue market's been heating up, we saw a little bit of a fall off," a secondary source said. "I think we're also in a little bit of the summer doldrums."

Friday's news on oil and unemployment rates also didn't help.

"First it was the new issue market [making things quiet]," he said. "Now it's oil and all that other garbage that's going on."

Sempra eases in trading

The Sempra issue was unchanged to wider at 217 bps bid, 212 bps offered, from 215 bps pricing, a source said.

Bank spreads tightened anywhere from 1 to 7 bps while brokerages were unchanged to 3 bps better.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.