Altria, Republic Services, Pentair price; primary's headline reaction muted; bank paper firms

By Andrea Heisinger and Cristal Cody

New York, May 2 - Altria Group, Inc., Republic Services, Inc. and Pentair, Inc. began the week and month of May with bond deals of various sizes.

Altria Group was first to price its $1.5 billion of notes due 2021. The bonds are guaranteed by parent company Philip Morris USA Inc.

The sale was followed by Republic Services with its $1.85 billion of notes with three different maturities.

A smaller deal was done by Pentair, which upsized its sale to $500 million from $400 million of 10-year notes.

Issuance was expected to ramp up for the week with between $15 billion and $20 billion pricing.

The news late Sunday that Osama bin Laden had been killed "didn't really affect" the high-grade bond market, said one source.

"I don't think it affected go, no-go [calls]," he said. "There are still more bad headlines waiting."

Despite the muted upbeat reaction in the market, deals are set to jump in volume on Tuesday following three successful trades on Monday.

Two of them priced lower than guidance, suggesting that demand was strong for them, a syndicate source said.

"I heard Republic had a lot on the books," he said.

No deals have been announced in the high-grade market for Tuesday.

Overall investment-grade Trace volume stayed under $10 billion on Monday, down more than 12% from Friday's volume, according to a market source.

The Markit CDX Series 14 North American investment-grade index eased 1 basis point on Monday to end at a spread of 89 bps, according to Markit Group Ltd.

"It's been very, very quiet," a bond source said.

Trading in corporate bonds on Monday was mixed, with financial paper including Citigroup, Inc.'s debt tighter on the shorter end, according to one bond source.

The new deal from Altria firmed 7 bps on the bid side, a trader said.

Treasuries were mostly unchanged on Monday. The benchmark 10-year Treasury note yield fell 1 bp to 3.28%. The 30-year bond yield fell 2 bps to 4.38%.

"We've been up a little bit and down a little bit all day long," said Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co. "The bottom line is Treasuries and the rest of the economy are still facing the same problems."

Republic Services' $1.85 bln

Republic Services priced $1.85 billion of bonds (Baa3/BBB/BBB) in three maturities late in the afternoon, according to a market source and FWP with the Securities and Exchange Commission.

The $700 million of 3.8% seven-year notes priced at a spread of Treasuries plus 115 bps.

A second part was $550 million of 4.75% 12-year notes that sold at 150 bps over Treasuries.

The third tranche was $600 million of 5.7% 30-year bonds priced at Treasuries plus 135 bps.

All three tranches were talked at a spread 10 bps more than where they priced, the market source said.

Barclays Capital Inc., J.P. Morgan Securities LLC, Merrill Lynch and RBS Securities Inc. were bookrunners.

The deal is guaranteed by subsidiaries that guarantee the company's revolving credit facility.

Proceeds will be used to fund the redemption of $600 million of 7.125% senior notes maturing in 2016, to purchase $59.1 million of subsidiary Browning-Ferris Industries, LLC's 9.25% debentures maturing in 2021, to purchase $180.7 million of subsidiary Browning-Ferris' 7.40% debentures maturing in 2035, to repay borrowings under revolving credit facilities and for general corporate purposes.

The solid waste collection company is based in Phoenix.

Altria's guaranteed deal

Altria Group sold $1.5 billion of 4.75% 10-year notes (Baa1/BBB/BBB+) by mid-afternoon to yield Treasuries plus 152 bps, said a market source away from the sale.

The notes sold at the low end of guidance in the 155 bps area, the source said.

Active bookrunners were Goldman Sachs & Co. and RBS Securities Inc.

Proceeds are being used for general corporate purposes.

The sale is guaranteed by Philip Morris USA Inc.

In trading, Altria's notes firmed to 145 bps bid, a trader said.

The holding company for tobacco subsidiaries is based in Richmond, Va.

Pentair upsizes 10-years

Pentair sold an upsized $500 million of 5% 10-year notes at Treasuries plus 175 bps, said a source close to the deal.

The size was increased from $400 million.

The notes (Baa3/BBB-) sold at 99.804 to yield 5.025%.

Merrill Lynch and U.S. Bancorp Securities were active bookrunners. J.P. Morgan Securities LLC was passive.

Proceeds will be used to finance a part of the Clean Process Technology unit from Norit Holding BV for about $700 million and pay for related fees and expenses.

The deal features a change-of-control put at 101 if the acquisition is not done by July 31. It is guaranteed by domestic subsidiaries of Pentair.

The industrial manufacturing company is based in Minneapolis.

Montpelier preferreds on deck

Montpelier Re Holdings Ltd. announced a $75 million, or 3 million shares, sale of perpetual non-cumulative preferred shares, series A, according to a 424B5 filing with the SEC and a market source.

Price talk was whispered in the 9% area. The deal is likely to be upsized, the source said, adding that it will likely price "in the high 8s." Pricing is expected on Tuesday.

The shares (BB+/BB+) will be priced at $25 each. They are callable starting in 2016.

Merrill Lynch is the bookrunner.

Proceeds are being used to support underwriting activities of insurance and reinsurance subsidiaries.

The insurance and reinsurance company is based in Pembroke, Bermuda.

Citigroup firms

Shorter-dated bank and financial paper was stronger in light trading on Monday, a source said.

Citigroup's 5.5% notes due 2014 tightened 10 bps in trading on Monday to 175 bps over Treasuries, the source said.

The financial services company is based in New York City.

Stephanie Rotondo contributed to this review

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