Hospitality Properties sells five-year bonds; recent bonds improve; deal flow set to continue

By Andrea Heisinger

New York, Aug. 7 - The influx of new issues into the investment-grade bond market finally slowed Friday following several busy days, netting only a small sale from Hospitality Properties Trust.

That deal did well in selling, ending up several times oversubscribed, but hit the wall in trading.

It was mostly unchanged soon after pricing, a trader said. Other recent deals from Duke Realty LP and BP Capital Markets plc were improved in trading.

Spreads tightened by late afternoon as Treasury yields widened significantly. The five-year note was 12 basis points wider to yield 2.82%, while the 30-year bond was out 8 bps to yield 4.61%.

Hospitality Properties offers five-year

Hospitality Properties Trust priced $300 million in 7.875% five-year senior notes to yield 8.125%.

The notes priced with a yield equivalent to Treasuries plus 530.3 bps.

Bookrunners were Bank of America Merrill Lynch, UBS Investment Bank and Wells Fargo Securities LLC.

The deal came in at the low end of guidance in the "mid-8s," an informed source said, referring to the yield.

It was also "well oversubscribed," at about five times over the books, he said.

Proceeds will be used to reduce amounts owed under a revolving credit facility.

The real estate investment trust is based in Newton, Mass.

Week ahead looks busy

Predictions of a slow August do not seem to be panning out, with the first week of the month seeing a large influx of deals. The week ahead is said to be just as busy.

"I don't see this slowing down," a syndicate source said.

Another syndicate source said his desk had a full calendar for the coming week.

"People will hopefully be coming out of the gates with a couple things on Monday," he said.

The past week had the full spectrum of names issuing, including a handful of financial names.

Hospitality Properties bond unchanged

The new 7.875% bond due 2014 from Hospitality Properties was seen in the secondary market but didn't go anywhere, a trader said.

The bonds were priced at Treasuries plus 530.3 bps and were quoted at 530 bps bid, with no offer, he said.

Duke Realty bonds gain

The two tranches priced Thursday from Duke Realty were improved by late Friday, a secondary source said.

The 7.375% bond due 2015 was in more than 20 bps from its Treasuries plus 479.2 bps pricing. It was at 460 bps bid, 425 bps offered. The 8.25% bond due 2019 didn't do quite as well, tightening to 460 bps bid, 435 bps offered. It priced at 463.3 bps over Treasuries.

BP Capital two-year improves

One of the two tranches of bonds sold Thursday by BP Capital Markets made gains in the secondary market a day later.

The 1.55% note due 2011 was in slightly to 32 bps offered after selling at Treasuries plus 40 bps. It was seen unchanged soon after selling on Thursday.

BP Capital, Citi, Dow top trading

A newly reopened bond from BP Capital Markets was most popular with investors as of early afternoon, a trader said.

The 3.875% bond due 2015 was reopened Thursday.

An outstanding long bond from Citigroup was also high in trading. The 8.125% notes due 2039 came in behind the BP bond, two days after the financial did a successful deal of five-year notes.

A recently issued 5.9% bond due 2015 from Dow Chemical Co. was also doing well. It priced Tuesday as part of a three-tranche sale.

Financial names top movers

Some of the bonds making the biggest swings by late Friday were from financial names, a source said.

A 5.45% bond due 2017 from Fifth Third Bancorp was about a little more than 40 bps tighter than a week ago. A Bank of America Corp. 6.5% bond due 2016 moved in about the same amount.

Investment bank Jefferies saw its 8.5% bond due 2019 widen 15 bps from the previous week. An American Express Credit Corp. 7.3% bond due 2013 was also out about 15 bps.

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