Primary market seen ready for deals on equities, oil boost; XTO, Ryder tighten in secondary

By Andrea Heisinger

New York, Aug. 5 - The Federal Reserve meeting Tuesday had its predicted outcome for rate changes, leaving the investment-grade market in good shape for new issues.

Sources said they were hoping the positive close to the day would encourage companies to come into the market after a day devoid of new issues. Tuesday normally would have seen an issue or two, one source said.

The secondary market was also quiet as there were no new issues for trading and little to watch otherwise, a source said.

XTO happy with issue

The week led off with a $2.25 billion issue from XTO Energy, Inc., which the company priced to pay for acquisitions.

"We were real pleased," said Brent Clum, senior vice president and treasurer for the oil and natural gas company. "It was nicely oversubscribed."

The issue was split into four tranches consisting of two-year, five-year, 10-year and 30-year notes.

This fit into the company's maturity schedule, Clum said, and the timing of the notes was because "the market seemed reasonable."

The company last issued notes in April. The recent issue's proceeds are earmarked for some property acquisitions done this year.

Market takes positive turn

The Fed decision not to increase or cut rates didn't affect the market much, a source said, as the lack of interest rate change wasn't a surprise.

"Everyone saw that coming with the futures," one market source said. "I think if they would have done something drastic it would have had more impact."

Other factors did, however, affect the overall tone for the positive.

Equities in particular brought a boost.

"It's just a good market out there right now," a source said. "Equities are through the roof, and oil's down, so really, what's not to like?"

Sources said they are hoping the boost will carry into Wednesday's open, encouraging potential issuers in a modest backlog to come into the market.

"Hopefully it will be more active tomorrow," a source said. "That's what we're praying, anyway."

"I think things definitely ended on more of a high note today, which was nice," another source said.

Ryder, XTO tighten from pricing

Recent new issues from Ryder System Inc. and XTO were seen doing well in secondary trading Tuesday, a day after pricing.

A market source said the Ryder 7.2% notes due 2015 were seen "tightening in quite a bit," to 357 bps in mid-afternoon trading from pricing at 375 bps on Monday.

The XTO bonds were also holding up well, with three of the four tranches of the $2.25 billion issue seen tighter.

A source said the 5.75% five-year notes were at 250 bps bid, from pricing at 253 bps. The 6.5% 10-year notes were seen at 256 bps bid, tightening from pricing at 258 bps.

The reopened 6.75% 30-year notes tightened the most, and were seen at 258 bps bid from pricing at 263 bps.

These bonds were seen at the highest volume of trading mid-afternoon, seen at a bid price of 252 bps.

Other bonds showing movement included American Express Co.'s 5.875% five-year notes. They were seen at 316 bps, widening from Monday's level of 307 bps.

Anheuser, Kerr-McGee among biggest movers

Among the day's biggest movers, Anheuser-Busch Cos., Inc. and JPMorgan Chase performed well, each tightening between 10 and 15 bps.

Mining and energy company Kerr-McGee led the pack going in the opposite direction, followed by General Electric Capital Corp. and Nevada Power. Each were seen widening between 11 and 15 bps.

Bank CDS gain

A trader said Tuesday that bank credit-default swaps debt-protection costs were generally 2 to 10 bps tighter.

The Washington Mutual CDS were 20 bps lower, the trader said.

Generally brokerage CDS spreads were seen 10 bps lower.

© 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.