Nevada Power sells $500 million notes, tightens in trading; du Pont rebounds; WaMu sinks again

By Sheri Kasprzak

New York, July 25 - Heading up light primary action to round out the week, Nevada Power Co. priced $500 million in general and refunding mortgage bonds.

Meanwhile, pricing action may pick up during the coming week, a market source told Prospect News Friday afternoon.

"It has been a really slow week," he acknowledged. "It might get some better next week. There are some things out there."

Another source said earlier this week that the financial and technology sectors may be prominent in pricings in the coming week or so.

In the secondary market, the new Nevada Power bonds were seen having tightened slightly from the spread at which they priced.

The new E.I du Pont de Nemours and Co. bonds that priced earlier in the week were seen actively traded at levels around where they priced - representing an improvement over Thursday's level.

Walgreen Co.'s recently priced bonds continue to trade fairly actively at tighter levels from their pricing

Washington Mutual Inc.'s nominally investment-grade issues continued to trade at badly distressed levels.

Nevada Power sells 10-years

Moving back to the Nevada Power deal, the company priced $500 million in series S general and refunding mortgage notes Friday, a term sheet said.

The 10-year, 6.5% notes (Baa3/BBB/BBB-) priced at 99.673 to yield 6.545%, or 245 bps over Treasuries. The notes are due Aug. 1, 2018.

The notes include a make-whole call at 40 bps over Treasuries.

The bookrunners were Banc of America Securities, Barclays Capital and Citigroup Global Markets.

Proceeds will be used for general corporate purposes.

Nevada Power tightens

When the new Nevada Power 6.50% notes due 2018 were freed for secondary dealings, a trader said that the bonds firmed slightly from the 245 bps spread over Treasuries at which they had priced. He saw them at 244 bps bid, 242 bps offered, "not a whole lot of change - tightened a little bit."

Among other recently priced issues du Pont's 5% notes due 2013 were trading at 169 bps bid - a little wider than the 168 bps level at which the Wilmington, Del.-based chemicals giant had priced $750 million of the bonds on Wednesday, along with $1.25 billion of 6% notes due 2018, which priced at 185 bps over.

However, the five-year bonds were seen having tightened a dozen points from the levels around 180 bps at which they had traded on Thursday.

The trader meantime saw Walgreen's 4.875% notes due 2013 continuing to trade around 162 bps bid, 158 bps offered, well in from the 175 bps level at which those bonds had priced on July 14.

Otherwise, he said, "there was not a whole lot going on," typical for a sunny summer Friday session.

WaMu continues to slide

Traders were quoting the nominally investment-grade-rated bonds of Washington Mutual sharply lower, on continued erosion of investor confidence in the big thrift.

A trader said WaMu "had to be the biggest mover," seeing its 7¼% notes due 2017 at 54.5 bid, down 11½ points from the last round-lot trade at 66 on Wednesday, while its 8¼% notes due 2010 slid to a final round-lot trade of 65 Friday from 74 on Thursday.

He also saw WaMu's 4 5/8% notes due 2014 at 51.5 bid - actually up slightly, though on very light trading, from the 50 level to which they fell on Thursday, but way down from levels around 61 at which they had been trading on Wednesday.

At another desk, the company's 5.625% notes due 2014 were seen having dropped almost 7 points to the 56 level.

The first trader said that Washington Mutual was "getting slammed" all around - its bonds, its shares and its wider credit-default swaps debt-protection costs.

All have been deteriorating since WaMu announced a $3.3 billion quarterly loss, largely due to the provisions it took for expected credit losses. Company officials at that time tried to put the best possible spin on the big loss story, asserting that WaMu has sufficient capital and credit availability to operate through the current downturn.

"I'm seeing all of these headlines on how much capital it has," he said, "but the bonds keep going down."

He noted that one headline quoted a WaMu defender asserting that the thrift "is not another IndyMac," referring to the big California-based thrift that was placed into receivership by authorities earlier in the month. "But there's all kinds of speculation out there that they will be the next to go. So, who knows what will happen?"

A trader watching the credit-default swaps market saw WaMu's debt-protection costs widen out radically, to about 18% upfront plus 500 bps annually.

WaMu sought to allay investor fears about its liquidity, saying it had beefed it up by some $10 billion in recent weeks to about $50 billion. However, its shares still fell almost 5% on the day, for around a 30% slide on the week.

© 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.