Life Technologies taps market, gains in trading; issuers look to week ahead; Allegheny firm

By Andrea Heisinger and Cristal Cody

New York, Feb. 11 - Life Technologies Corp. sold a split-rated deal in the high-grade bond market on Thursday, making it the only new corporate issue of the day.

The $1.5 billion sale in three tranches went overnight from a Wednesday that was clouded by weather woes and fears about the collapse of Greece's economy due to debt.

Things perked up slightly on Thursday with the news of the European Union's loan to the struggling country, but fears remained about the health of other countries in the union.

"It's still kind of ugly," a market source said of the tone. "It's not exciting out there at all."

There are no new deals forecast for Friday ahead of the long President's Day holiday weekend.

The primary and secondary investment-grade markets mostly had a "heavy" feel this week, but on Thursday, trading "looked better," a source said.

"It looks to have a little better tone today than it has some of the days this week," the source said. "The volume's decent."

Overall Trace volume jumped about 30% to nearly $15 billion on Thursday, according to a market source.

Also, the CDX Series 13 North American high-grade index firmed 4 bps to a mid bid-asked spread level of 98 bps.

Meanwhile, Treasuries eased on Thursday after the sale of $16 billion in U.S. long-term bonds.

The yield on the 10-year Treasury note moved out to 3.72% from 3.69% on Wednesday. In addition, the yield on the 30-year Treasury bond eased 3 bps to 4.66%, according to market sources.

In secondary trading on Thursday, the new deal from Life Technologies saw life, gaining notable, while a buyout prompted closer looks at Allegheny Energy Inc.'s outstanding debt, according to sources, and helped the bonds move tighter.

In addition, some of Bank of America Corp.'s high-grade debt continued "bouncing around" on Thursday, a source said.

Life Technologies prices split-rated notes

Life Technologies priced $1.5 billion of split-rated senior unsecured notes (Ba1/BBB-/BBB-) in three tranches after the sale went overnight, a source close to the deal said.

The $250 million of 3.375% three-year notes priced at a spread of 200 bps over Treasuries. They were talked in the 205 bps area, a source said, and priced tight to that.

A $500 million tranche of 4.4% five-year notes priced at Treasuries plus 210 bps. Price guidance was in the 215 bps over Treasuries area, so again the notes came tight to talk.

The third tranche was $750 million of 6% 10-year notes sold at a spread of 232 bps over Treasuries. This was at the tight end of talk in the Treasuries plus 237.5 bps area.

Bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities.

Proceeds are being used to repay existing debt.

The biotechnology tools company is based in Carlsbad, Calif.

Market unmoved, issuers look ahead

New deals were scarce again on Thursday, but the one sale from Life Technologies that did price was "a big one," said a syndicate source away from the deal.

When asked why there was interest in the $1.5 billion sale, the source said it was "fairly big, and it will be interesting to see how it performs [in trading]."

Other than that sale - which went overnight from a dismal Wednesday - there was little action in the high-grade market.

One source said he was happy to have at least one deal out there, but that most people were focusing on the week ahead after the upcoming long holiday weekend.

"The market was fairly flat today," he said, noting it was a slight improvement from the uncertainty earlier in the week.

Another source said that "by this point, people are working on things for next week."

With weather and market tone wreaking havoc on the market in recent days, it's had a decidedly down effect.

"It's felt like a Friday all week," a syndicate source said.

Life Technologies trades tighter

Life Technologies' new notes moved tighter in secondary trading after pricing earlier in the day, according to sources.

The 3.375% notes due 2013, which priced at Treasuries plus 200 bps, were "bid at 195 bps but I did not see any offers," one trader said.

In the second tranche, Life Technologies priced 4.4% notes 2015 at Treasuries plus 232 bps. The notes were seen in the secondary at 185 bps offered, the source said.

"I don't know if they're getting it. I saw a bid on the five-years a little earlier at 200 bps. That's pretty wide."

In addition, the company's 6% notes due 2020, which priced at Treasuries plus 232 bps, were quoted in secondary trading at 217 bps bid.

"They have come in," the source said.

Buyout spurs activity in Allegheny

Allegheny Energy's bonds were active and better Thursday after Akron, Ohio-based power company FirstEnergy Corp. announced it would buy out the Greensburg, Pa.-based company for $4.7 billion in stock.

As part of the deal to create one of the country's largest utilities, FirstEnergy also will assume $3.8 billion of Allegheny's net debt.

Allegheny's 5.75% notes due 2019 were "trading today," a source said.

The notes due 2019 were seen Thursday at 195 bps bid, 185 bps offered.

"There was a lot of activity in the 10-years and yesterday in the longer ones," the source said.

Allegheny's 6.75% bonds due 2039 firmed Thursday to a 225 bps bid versus yesterday's quote of 250 bps bid, 220 bps offered.

"That's a very wide spread, so they've come in for sure," one trader remarked.

The notes were seen earlier this week in trading activity on Tuesday at 215 bps bid, 205 bps offered - "so they've tightened," the trader said.

Bank of America active

Bank of America's 7.625% notes due 2019 continued the weeklong stretch of volatility in the secondary, tightening in trading from the previous day, according to sources.

"They widened yesterday and looks like today they're maybe a little tighter," a trader said.

The notes were seen late Thursday at 237 bps bid.

"Earlier this morning, there was a 240 bps bid for them," the trader said.

The notes were quoted on Wednesday at 244 bps after widening Tuesday to 225 bps from 210 bps at the start of the week.

Another bond from Charlotte, N.C.-based Bank of America - the 5.45% notes due 2014 - also is "bouncing around," the trader said.

On Wednesday, the four-year notes were "offered at 210 bps. This morning, they tightened to 205 bps and then came back out to 210 this afternoon."

Financials weaker

Meanwhile, the financial sector was seen weaker on Thursday, according to sources.

The cost of insuring holders of major bank or brokerage house paper against a possible default widened slightly, one source said.

For example, bank paper CDS levels were seen anywhere from 3 bps to 11 bps wider.

Also, brokerage-name CDS costs were quoted 3 bps to 12 bps wider.

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