BioMed Realty sells bonds, tone remains constructive; CenturyLink wider on Qwest acquisition

By Andrea Heisinger and Cristal Cody

New York, April 22 - BioMed Realty LP sold bonds on Thursday as new issue supply mostly dried up after two busy days of deals.

The real estate agent and manager priced $250 million of 10-year notes under Rule 144A.

Fresh worries about Greece's financial stability and earnings blackouts contributed to the drought, sources said.

Spreads on new issues moved slightly wider the previous day, which also may have made issuers think twice about pricing anything.

"There was that, and I don't think there's much supply," a source said.

Another source who worked on the day's BioMed deal said the deal "went really well" and that the market "felt constructive."

In secondary trading on Thursday, high-grade debt from CenturyLink moved out on its plan to buy Qwest Communications International Inc., according to sources.

Elsewhere, Teck Resources Ltd.'s outstanding notes were once more active on Thursday in continuing reaction after the company was upgraded to investment grade earlier this month, sources said.

In addition, Biomed Realty's new notes firmed on the bid side in trading, according to sources.

"People are still trying to get their hands on paper," a trader said. "As far as the debt market goes, the tone was OK."

Meanwhile, Goldman Sachs Group Inc.'s notes weakened on Thursday, a source said.

Overall Trace volume was down 5% to more than $13 billion, according to a source.

"Volume looks good," a trader said.

The CDX Series 14 North American high-grade index eased 2 bps to a mid bid-asked spread level of 89 bps, according to a source.

Also on Thursday, U.S. Treasuries eased.

The yield on the 10-year benchmark Treasury note moved out to 3.77% from 3.74%, while the yield on the 30-year Treasury bond eased 2 bps to 4.64%.

BioMed prices $250 million

San Diego-based BioMed Realty sold $250 million of 6.125% 10-year senior unsecured notes (Baa3/BBB-) to yield Treasuries plus 250 bps, an informed source said.

The deal came at the tight end of talk in the "mid-to-high 200 [bps]," a source said. It was launched at 250 bps over Treasuries.

Demand on the books was about $1.5 billion, the source said, adding that it the company's "debt IPO."

The notes were priced under Rule 144A.

Bookrunners were Credit Suisse Securities, Deutsche Bank Securities and Wells Fargo Securities.

The real estate agent and manager is based in San Diego.

Deals dry up as earnings drag on

There are about two more weeks left in earnings season, a source said at the end of the day, meaning that the regular flow of new deals will be down for the short term.

The day's one deal, from BioMed Realty, showed healthy demand on the books, and came at the tight end of price talk despite having the lowest investment-grade ratings from both Moody's and Standard & Poor's.

"There's still demand," a source said. "People are willing to put cash to work."

After two busy days, the week's calendar was mostly exhausted and happened to coincide with increased fears about European countries.

"It's always Greece," a source said, referring to more negative headlines about the country.

There is "nothing substantial" set to price in the high-grade market for Friday, with most desks looking ahead to the coming week.

Many companies that were looking to raise money with debt sales did so after announcing earnings.

CenturyLink moves out

CenturyLink's outstanding high-grade debt traded wider on Thursday on news of its plan to buy Qwest Communications International for $10.6 billion in stock, a source told Prospect News.

The deal will combine the nation's third and fourth biggest landline phone companies.

CenturyTel Inc. merged with Embarq in July to form Monroe, La.-based CenturyLink and create the fourth biggest telephone company in the country.

In secondary trading, CenturyLink's outstanding 6.15% senior notes due 2019 moved out, a trader said.

"Looks like a lot of activity today," the trader said. "They're trading about 15 to 20 basis points wider than they were yesterday."

About $2 million of the notes traded Thursday at 235 bps and later at 227 bps.

Meanwhile, Qwest's bonds also were active on the news.

"Guess the news had Qwest bonds trading up about 3 points," one source said.

Teck basically unchanged

Since Teck Resources was upgraded to investment grade earlier this month by one of the rating agencies, the outstanding bonds are seeing activity, sources said.

Standard & Poor's Ratings Services raised Teck's rating to BBB from BB+.

Teck's 9.75% senior secured notes due 2014 were seen trading Thursday at 140 bps bid, 137 bps offered, one trader said.

"They've been active, but it doesn't look like much change in the prices. If anything, they're maybe trading 5 basis points better than they were yesterday."

Teck is a Vancouver, B.C.-based mining company.

Teck trading tapers off

After having pretty much dominated the non-new deal portion of the high yield secondary market for the past several sessions, ever since getting a ratings boost to investment grade from Standard & Poor's, Teck Resources' bonds quieted down somewhat on Thursday, pushed aside by the flurry of activity generated by announcement of Qwest Communications International's coming purchase by CenturyTel.

"It's like a boxing upset," joked one trader in noting how Teck was pushed off its recent pedestal as the busiest name.

A market source saw Teck's 10¾% notes due 2019 up ½ point on the session at 125½ - but saw a volume of only about $51 million - slightly more than half of Wednesday's total.

The Vancouver, B.C.-based energy and mining concern's 9¾% notes due 2014 were likewise ½ point firmer at 121 5/8 - but there too, volume had been knocked down to around the $32 million level from nearly $70 million the day before.

High yield traders noted that ever since the upgrade, there has been strong interest shown in the now split-rated (Ba1/BBB/BBB) issues by high-grade investors, boosting their volume totals.

Biomed sees tighter bids

Meanwhile, a lone deal from investment-grade primary tightened on the bid side but had no immediate takers, sources said.

Biomed Realty priced $250 million of 6.125% notes due 2020 at Treasuries plus 250 bps.

They were last seen by traders at 233 bps bid, but "no offers," one source said.

Still, it's "about 15 basis points better than where they came," a trader said.

Goldman wider

Also in the secondary on Thursday, Goldman's outstanding debt moved out further, according to a source.

Goldman faces civil fraud charges regarding its handling of subprime securities with investors that were filed on Friday by the Securities and Exchange Commission.

The New York-based bank's debt immediately widened on the charges and there was further weakening on Thursday.

"Goldman 10-years are wider by at least 10 bps," a trader said. "Saw them yesterday at 180, 170 and about an hour ago at 187, 182."

-Paul Deckelman contributed to this report

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