U.S. Bancorp, Quebec, TD Bank sell bonds; primary stable but unexciting; Ralcorp bonds firm

By Andrea Heisinger and Cristal Cody

New York, July 22 - The Province of Quebec sold notes early on Thursday, and the deal was followed by issues from U.S. Bancorp and Toronto-Dominion Bank.

Quebec's deal was announced on Wednesday and went overnight. The Canadian province priced $1.5 billion of 10-year global notes.

U.S. Bancorp sold its $1 billion of five-year notes not long after the deal was announced. The bank and financial services company priced its bonds a day after its second-quarter earnings announcement.

Toronto-Dominion priced its $2 billion issue of five-year covered bonds fairly late. It's part of a resurgence of covered bonds in the high-grade market lately.

Terms were given for a deal priced on Wednesday by Rabobank Nederland. The Dutch financial services company sold $1.1 billion of floating-rate notes due in 2012.

Financials and sovereigns dominated the market for the day, and that has been the case for much of the week with only two deals pricing from non-financials.

Low rates have nudged some of the big banks into the market after announcing earnings.

The CDX Series 14 North American investment-grade index was firmer after easing the previous day, a source said. The index tightened 4 basis points to a spread of 108 bps, according to the source.

"Seemed spreads were tighter overall. Volume's decent," a trader said.

Overall investment-grade Trace volume slipped 13% to about $12.5 billion, a market source said.

In secondary trading, the new high-grade debt from U.S. Bancorp firmed, while Ralcorp Holdings, Inc.'s two tranches of senior notes also were stronger, traders said.

Treasuries fell, which reversed gains from the previous day on a renewed stock rally on Thursday.

The yield on the benchmark 10-year Treasury note eased to 2.93% from 2.88%.

"Treasuries were off today more because of stocks being up than anything else," a trader said.

The yield on the 30-year bond also eased to 3.95% from 3.89%.

U.S. Bancorp sells five-years

Minneapolis-based U.S. Bancorp priced $1 billion of 2.45% five-year notes (Aa3/A+/AA-) by early afternoon to yield Treasuries plus 78 bps, an informed source said.

Barclays Capital Inc., Morgan Stanley & Co. Inc. and U.S. Bancorp Securities ran the books.

The bank saw its profit rebound in the second quarter from a year ago. It reported a profit of $862 million for the quarter, up from $221 million a year ago. Interest and fees helped with revenue, and it's expected the bank will be facing less loss from consumer loans in the future.

The financial services company is based in Minneapolis.

Quebec prices $1.5 billion

Quebec sold $1.5 billion of 3.5% 10-year global notes (Aa2/A+/AA-) early in the day to yield Treasuries plus 60.45 bps, or mid-swaps plus 60 bps, a source away from the sale said.

The bookrunners were Bank of America Merrill Lynch, Deutsche Bank Securities Inc., HSBC Securities and National Bank of Canada Financial.

Proceeds will be added to a consolidated revenue fund of Quebec to be used for general purposes or partially or entirely credited to the Financial Fund of Quebec to be used for loans to public institutions or government enterprises and agencies.

The issuer is based in Montreal.

Primary stable, but few takers

It was unclear by the end of the day if issuers were pricing bonds to take advantage of low rates or because they genuinely needed to raise capital.

"I think US Bank for sure priced [after earnings] because they could," a source said. "They had pretty good [Q2] numbers."

The bank showed a profit several times higher than a year ago.

The tone at the top of the day was better than the previous day that had started with some downbeat earnings and saw a dip in the stock market.

"It was maybe a little better today," a source said. "We still didn't have much in corporate today."

There isn't much expected to price Friday. A deal remains in the pipeline from Chicago Parking Meters LLC, which was announced on Monday and expected to price mid-week. A syndicate source confirmed late Thursday that the deal has yet to price.

After the close, one source called Thursday "pretty unexciting."

Toronto-Dominion sells

Toronto-Dominion Bank sold $2 billion of 2.2% five-year covered bonds (Aaa/AAA) later in the day to yield Treasuries plus 57.1 bps, a source close to the deal said.

Barclays, Deutsche Bank Securities, RBS Securities and TD Securities were the bookrunners.

The financial services company is based in Toronto.

Rabobank gives terms

Rabobank Nederland gave the terms for its $1.1 billion of floating-rate notes due 2012 priced at par to yield Libor plus 20 bps, a market source away from the sale said.

The notes (Aaa/AAA) were sold under Rule 144A on Wednesday.

The bookrunner was Deutsche Bank Securities.

The financial services company is based in Utrecht, the Netherlands.

U.S. Bancorp tighter

In secondary trading, U.S. Bancorp's new notes were stronger, though not much activity was seen late in the day, traders said.

The 2.45% notes due 2015 priced at Treasuries plus 78 bps and were seen trading soon after at 75 bps bid, 74 bps offered, one trader said.

"Didn't see anything on these," another trader said.

Ralcorp stronger

Ralcorp Holdings' two tranches of senior notes (Baa3/BBB-/BBB-), which were sold Wednesday, firmed in secondary trading on Thursday, sources said.

"About 10 tighter on both," a trader said.

The 4.95% notes due 2020, which priced on Wednesday at Treasuries plus 210 bps, were tighter on Thursday at 200 bps bid, 190 bps offered, according to one source.

The company also reopened its issue of 6.625% bonds due Aug. 15, 2039 to add $150 million. The bonds priced at Treasuries plus 255 bps.

Those bonds were seen late in the day at an offer of Treasuries plus 247 bps, a trader said.

The food and breakfast cereal maker is based in St. Louis.

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