IADB does small deal; Ruby Pipeline plans debut sale; AT&T, Goldman Sachs issues widen

By Andrea Heisinger and Cristal Cody

New York, Nov. 1 - Issuance was minimal on Tuesday in the high-grade bond market as more bad news came out of Greece and demand for paper in the market declined.

There was a $500 million sale of two-year notes from the Inter-American Development Bank.

A sale was announced by Ruby Pipeline LLC, which transports natural gas. The joint venture between El Paso Corp. and Global Infrastructure Partners is expected to price $1.075 billion of senior notes sometime this week.

A brief run of deals from financial names in the previous week was likely ended as MF Global Holdings Ltd. filed for bankruptcy amid news that it used $700 million of its clients' money to finance trades.

There is a Federal Reserve Federal Open Market Committee meeting on Wednesday, and sources said that will contribute to the day being quiet amid all of the other factors negatively affecting the market.

"Hopefully something good comes out of it," a source said of the meeting.

"Based on how things ended today ... it depends on if the tone dramatically changes overnight," the source said of the possibility of any new deals Wednesday.

Many of the issuers looking at the market are doing so opportunistically, and they are not going to sell debt under the current conditions, the source said.

Corporate bonds traded weaker for a second day on Tuesday, sources said.

The Markit CDX Series 17 North American Investment Grade index eased 6 basis points to a spread of 127 bps.

AT&T, Inc.'s bonds widened across the curve.

Financial paper also traded mostly wider. Goldman Sachs Group, Inc.'s notes closed the day more than 10 bps weaker.

Overall trading volume crept up about 5% to $10.3 billion on Tuesday.

Treasuries ended stronger. The benchmark 10-year note yield dropped 12 bps to 2% as investors moved into safer-haven debt. The 30-year bond yield fell 13 bps to 3%.

IADB sells short bond

The Inter-American Development Bank sold $500 million of 0.375% two-year global notes (Aaa/AAA) early in the day to yield mid-swaps minus 16 bps, or Treasuries plus 18.45 bps, an informed source said.

The bookrunners were Barclays Capital Inc. and Citigroup Global Markets Inc.

The issuer provides financing for Latin American and Caribbean countries and is based in Washington, D.C.

Ruby Pipeline plans debt

Ruby Pipeline announced a $1.075 billion sale of senior notes with pricing expected sometime later in the week, a source said.

The notes (Baa3/BBB-/BBB-) are being sold under Rule 144A and Regulation S.

Barclays Capital, RBS Securities Inc. and RBC Capital Markets LLC are running the books.

The natural gas holding company is a joint venture between El Paso and Global Infrastructure Partners.

AT&T widens

AT&T's 5.8% notes due 2019 widened to 107 bps from 85 bps over Treasuries the previous day, a bond source said.

The telecommunications company's long bonds, the 6.55% bonds due 2039, traded 13 bps wider at 183 bps on Tuesday.

The company is based in Dallas.

Goldman weakens

Goldman Sachs' 7.5% notes due 2019 widened to 344 bps from 331 bps.

The financial services company is based in New York.

CDS costs higher

Bank and brokerage credit default swaps costs rose on Tuesday, a sign of lessened investor confidence in the financials industry.

Bank CDS costs rose 5 bps to 18 bps.

Brokerage/investment bank CDS costs were up from 10 bps to 20 bps. For example, Merrill Lynch's CDS costs rose 10 bps, Goldman Sachs' moved up 18 bps and Morgan Stanley's traded 20 bps higher.

Paul Deckelman contributed to this review

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