JPMorgan, Goldman price debt alongside two sovereign deals; bank paper widens, Comcast flat

By Andrea Heisinger and Cristal Cody

New York, Oct. 19 - Big banks intermingled with sovereign issuers in the high-grade debt market on Wednesday as many corporate names remain in earnings blackout or simply don't want to take chances in the current volatility.

Both Goldman Sachs Group Inc. and JPMorgan Chase & Co. announced and brought deals late in the day. Both recently announced third-quarter earnings - Goldman Sachs with a loss announced on Tuesday and JPMorgan with a drop in revenue for the quarter the previous week.

JPMorgan sold the larger deal of the two at $1.75 billion in a reopening of notes due 2021 originally priced in August.

Goldman Sachs priced an upsized $500 million of $25-par 50-year notes. The size was increased from $250 million.

The company announced the "baby bond" deal earlier in the day and it priced not long after the market closed. The deal was upsized to $500 million from $250 million and was priced at 6.5%, at the low end of price talk.

However, the deal was not performing well in the gray market and one trader went so far as to say that the issue "wasn't priced right."

Other Goldman issues were trading weaker on the day.

Export Development Canada and the International Bank for Reconstruction and Development both priced notes in the trades that went overnight from Tuesday.

EDC priced $1 billion of five-year notes by early afternoon. This deal was preceded by IBRD's sale of $4 billion in two-year notes.

There weren't any particularly bad headlines for the day, which may have been why JPMorgan and Goldman Sachs jumped into the market, sources said.

"It was still bad, but they probably figured they'd get some cheap rates," a syndicate source away from both deals said in reference to low interest rates at the moment.

"We're not going to see a rush of deals tomorrow or anything."

Still, with both issuers selling their debt fairly quickly it's not impossible that other big banks that have already reported third-quarter numbers will come to the market.

"They're probably not going to do huge deals, but it's possible," a source said. "We're hearing away that it should be quiet again."

In the secondary market, bonds were "better throughout the day and the last few hours felt some weakness," a trader said.

The Markit CDX Series 17 North American high-grade index rose 1 basis point to a spread of 134 bps.

Financial paper traded better for most of the session but felt "softer here at the end of the day," a trader said. The sector was seen about 5 bps wider.

Citigroup, Inc.'s notes widened after it reported it has agreed to pay $285 million to settle civil fraud claims from the Securities and Exchange Commission regarding bad mortgage bond investments.

In the telecom sector, Comcast Corp.'s bonds traded flat, while Time Warner Cable Inc.'s debt ended stronger, though gains were pared by late afternoon.

Overall trading volume rose to about $15 billion on Wednesday.

Government bonds ended better on the mid-range of the bond curve as doubts grew that a resolution would be reached for Europe's debt problems at a weekend meeting.

The 10-year note yield fell 2 bps to 2.16%. The yield on the 30-year bond rose 1 bp to 3.18%.

JPMorgan sells $1.75 billion

JPMorgan Chase reopened its issue of 4.35% notes due 2021 to add $1.75 billion, a market source said.

The notes (Aa3/A+/AA-) were priced at Treasuries plus 225 bps.

Total issuance is now $3 billion including the original $1.25 billion priced on Aug. 3 at 175 bps over Treasuries.

J.P. Morgan Securities LLC was bookrunner.

In the secondary market, the notes traded at 225 bps bid, 220 bps offered, a source said.

The financial services company is based in New York City.

Goldman's 50-year paper

Goldman Sachs Group priced an upsized $500 million of 6.5% 50-year senior notes, according to a market source.

The $25-par notes (A1/A/A+) priced at the low end of talk.

Goldman Sachs & Co. was bookrunner.

Proceeds will be used for general corporate purposes.

Goldman Sachs is a New York-based investment banking and financial services firm.

$1 billion from Canada's EDC

Export Development Canada sold $1 billion of 1.25% five-year notes to yield mid-swaps plus 8 bps, or Treasuries plus 26.9 bps, a market source said.

The notes (Aaa/AAA) were sold wider than talk of mid-swaps plus 6 bps, the source said.

BNP Paribas Securities Corp., HSBC Securities plc, J.P. Morgan Securities LLC and RBC Capital Markets LLC were bookrunners.

The government-backed credit agency for exporters is based in Ottawa.

IBRD offers $4 billion

International Bank for Reconstruction and Development sold $4 billion of 0.5% two-year notes (Aaa/AAA/AAA) to yield Treasuries plus 24 bps, an informed source said.

Bookrunners were BNP Paribas Securities Corp., Citigroup Global Markets Inc., Daiwa Securities America Inc. and RBC Capital Markets LLC.

The member of the World Bank provides loans to developing countries and is based in Washington, D.C.

Citi wider

Citigroup's notes widened 10 basis points on Wednesday in secondary trading, a source said.

"The CDS are about 5 basis points wider," the trader said.

The financial services company is based in New York City.

CDS costs down

Bank and brokerage credit default swaps costs were mostly lower on Wednesday, a trader said.

Bank of America's CDS costs were 5 bps lower at 345 bps bid, 360 bps offered. Wells Fargo's CDS costs rose 2 bps to 145 bps bid, 155 bps offered.

On the brokerage side, Goldman Sachs' CDS costs fell 15 bps to 320 bps bid, 330 bps offered.

Merrill Lynch's CDS costs ended 5 bps lower at 395 bps bid, 410 bps offered.

Morgan Stanley's CDS costs fell 10 bps to 365 bps bid, 385 bps offered.

Comcast flat

In other trading, Comcast's 5.15% senior notes due 2020 closed the day unchanged at 120 bps bid, 110 bps offered, a trader said.

Comcast priced the notes at a spread of 147 bps over Treasuries on Feb. 24, 2010.

The telecommunications company is based in Philadelphia.

Time Warner Cable firms

Time Warner Cable's 10-year notes traded tighter on the day and were a standout in the mostly flat sector, a trader said.

The 4% notes due 2021 (Baa2/BBB/BBB) firmed 3 bps to 180 bps bid, 170 bps offered.

"They were as much as 15 better earlier in the day," the trader said.

The notes were sold at a spread of Treasuries plus 210 bps on Sept. 7.

The entertainment company is based in New York City.

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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