Scotiabank, Regency Centers, Aviation Capital among day's sellers; NBC firmer in trading

By Andrea Heisinger and Cristal Cody

New York, Sept. 30 - The Bank of Nova Scotia, Citigroup Capital XIII, Sydney Airport Finance Co., Aviation Capital Group Corp. and Regency Centers, LP closed out the month of September on Thursday by selling bonds in the investment-grade market.

Regency Centers sold its $250 million of notes due 2021 to repay debt and finance an interest rate swap. The bonds are guaranteed by parent company Regency Centers Corp.

The Bank of Nova Scotia was late out of the gates with its $1.25 billion sale of five-year senior notes. These priced late in the day at the tight end of talk, with the deal slightly oversubscribed.

The U.S. Department of the Treasury sold $2.246 billion of Citigroup Capital 30-year trust preferred shares. The sale had been announced on Wednesday, with a sale of American International Group preferred stock by the Treasury announced on Thursday. The Citigroup shares were junk-rated by priced on the high-grade syndicate desks.

There was a $500 million sale of long 10-year notes by Australia's Sydney Airport Finance. The notes were priced tighter than guidance.

Another sale came from Aviation Capital Group, with an upsized $600 million of 10-year notes priced under Rule 144A.

AWAS Aviation Capital Ltd. announced price talk for its $600 million sale of split-rated six-year notes that are expected to price Friday after the books have closed.

The last day of the week should be slower, a source said, with "nothing major" set to price.

In secondary trading, Royal Bank of Canada's new notes were slightly wider, while NBC Universal, Inc.'s four-tranche deal firmed, sources said.

Debt in the media sector was seen 5 points better early on, but then ended the day about 1 bp to 2 bps better.

"There was a lot of activity in the morning with everything better," a trader said.

"Everybody was increasing their bid and kept the momentum going higher. Toward the end of the day, there definitely was some weakness. We came off our highs, but there wasn't a ton of volume to support that."

The Markit CDX Series 14 North American investment-grade index was unchanged on Thursday from Wednesday's spread of 107 bps, according to Markit Group Ltd.

Overall investment-grade Trace volume rose 6% to about $13.7 billion, a source said.

U.S. Treasuries fell on longer dated issues on improved economic data, sending yields up.

The yield on the 10-year note rose 1 bp to 2.51%. The 30-year bond yield rose 1 bp to 3.69%.

"Last-minute window dressing by portfolio managers for the quarter also likely shaped market activity today," a source said.

Scotiabank prices $1.25 billion

The Bank of Nova Scotia priced a benchmark $1.25 billion of 2.05% five-year senior notes (Aa1/AA-/AA-) at a spread of Treasuries plus 83 bps, a source close to the sale said.

The sale was announced by late morning and priced around the market close at the tight end of guidance in the 85 bps area. The notes launched at 83 bps, the source said.

Books were oversubscribed at roughly $1.8 billion.

Bank of America Merrill Lynch, Citigroup Global Markets, Morgan Stanley & Co. Inc. and Scotia Capital were bookrunners.

Proceeds are going for general corporate purposes.

The financial services company is based in Toronto and Halifax, Canada.

Citi Capital sells TRUPS

The U.S. Department of the Treasury sold $2.246 billion, or 89.84 million shares, of Citigroup Capital 7.875% 30-year trust preferred securities on Thursday at par of $25, a market source said.

The size had initially been announced at $2.2 billion.

The securities (Ba1/BB-/BB-) have a fixed-rate coupon until Oct. 30, 2015 and then a floating-rate coupon of three-month Libor plus 637 basis points until maturity if not redeemed.

A source away from the trade said that it "took forever" and that the overnight sale was likely due to the amount of allocation involved and the number of bookrunners.

"It was a tough one," the source said.

Citigroup Global Markets was global coordinator. Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc., UBS Investment Bank and Wells Fargo Securities LLC ran the books.

Citigroup Inc. is guaranteeing the notes and will receive no proceeds from the sale.

The shares were seen trading later at 25.75, 25.95, a source said.

The funding arm of Citigroup is based in New York City.

Volume returns at month's end

After a couple of slow days in the primary, high-grade bonds jumped back to life with several new deals pricing to end what may be a record-setting September. There was $122.301 billion priced for the month.

The majority of issuance is likely done for the week, with one source saying, "Tomorrow should slow down. We're not seeing anything big coming to the market."

There has been around $19 billion priced for the week so far, which is not far off projections of $20 billion to $25 billion, and doesn't leave much room for any massive deals Friday.

Regency Centers $250 million

Florida-based Regency Centers sold $250 million of 4.8% guaranteed notes due 2021 by mid-afternoon to yield 230 bps over Treasuries, a source who worked on the sale said.

The nites priced at the tight end of guidance in the 235 bps area, with a margin of plus or minus 5 bps, the source said.

The notes (Baa2/BBB) are guaranteed by Regency Centers Corp.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC ran the books.

Proceeds are going to repay a portion of $250 million of 6.75% notes due Jan. 15, 2012 and $173 million of 7.95% notes due Jan. 15, 2011, as well as $35 million for an existing interest rate swap. The remainder will be used for general corporate purposes, including repayment of a line of credit maturing in Feb. 2011.

The owner, operator and developer of retail shopping centers is based in Jacksonville.

Sydney Airport's 10-years

Sydney Airport Finance sold $500 million of 5.125% senior notes (Baa2/BBB) due 2021 to yield 260 bps over Treasuries, a source away from the sale said.

These priced tighter than talk in the 275 bps area, the source said.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and RBS Securities were bookrunners.

Proceeds are being used to repay debt.

The financing company is based in Sydney, Australia.

Aviation Capital upsizes

Aircraft leasing and management company Aviation Capital Group priced an upsized $600 million of 7.125% 10-year senior unsecured notes late in the day at par to yield 7.125%, an informed source said.

The size was increased from the $300 million announced earlier in the day.

The notes (BBB-/BBB-) were sold under Rule 144A.

Bookrunners were Citigroup Global Markets and J.P. Morgan Securities LLC.

The issuer is based in Newport Beach, Calif.

AWAS talks notes

AWAS Aviation Capital talked its split-rated $600 million offering of six-year senior secured notes (Ba2/BBB-) with a 6.75% to 7% yield, an informed source said on Thursday.

The books close at 10 a.m. ET on Friday, and the notes are expected to price thereafter.

Goldman Sachs is the left active bookrunner for the Rule 144A and Regulation S with registration rights offer. Morgan Stanley is the joint active bookrunner.

The Dublin, Ireland-based aircraft leasing company will use the proceeds to repay debt, finance purchase of new aircraft and for general corporate purposes.

RBC wider

The Royal Bank of Canada's new debt was slightly weaker in the secondary market, a source said. RBC sold $1 billion of 1.25% notes due in 2014 (Aaa/AA-) on Wednesday at 53 bps over Treasuries.

The notes were seen trading Thursday afternoon at an offer of 54 bps, the source said.

The financial services company is based in Toronto.

NBC firms

NBC Universal's massive deal sold on Monday was stronger in Thursday's secondary market, according to a trader.

All the tranches of debt (Baa2/BBB+) due 2014, 2016, 2021 and 2041 tightened.

"Going out the door, they're 2 basis points better," the trader said.

The shorter duration of debt included 2.1% notes due 2014 priced at a spread of 145 bps over Treasuries and 2.875% notes due 2016 priced at Treasuries plus 160 bps.

NBC's third tranche of 4.375% notes due 2021 priced at Treasuries plus 185 bps. The last tranche of 5.95% bonds due 2041 priced at a spread of 225 bps over Treasuries.

The broadcasting and entertainment company is based in New York City.

Gold Fields tighter

Gold Fields Ltd. priced $1 billion of 10-year notes (Baa3/BBB-e) on Thursday, the company's first offering in dollars, a source said.

The Johannesburg, South Africa-based producer of precious metals priced $1 billion of 4 7/8% notes due Oct. 7, 2020 at a spread of 245 bps over Treasuries. The notes were sold through the company's Gold Fields Orogen Holding BVI Ltd. unit.

In the secondary market, the notes were firmed to 244 bps bid, 240 bps offered, the source said.

Proceeds will be used to repay debt and for general corporate purposes.

Bank, brokerage CDS costs

The cost of credit default swaps contracts protecting holders of bank paper against event of default was seen 3 bps tighter to even on Thursday, a source said.

Also, the CDS costs for brokerage/investment bank paper were quoted at 3 bps tighter to even, the source said.

Paul A. Harris and Stephanie Rotondo contributed to this review.

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