Huge interest in Xerox sale, $20 billion in new deals set; Plum Creek 55 bps better than issue

By Andrea Heisinger and Cristal Cody

New York, May 13 - Xerox Corp. was in the high-grade market Friday, capping the week off with a $1 billion issue.

The document management company sold $1 billion of notes in two parts. The sale was made up of $300 million in three-year floating-rate notes and $700 million of 10-year notes. Each was sold at the tight end of guidance.

Another busy week is expected starting Monday, with "some big deals," one source said late Friday. The past week ended with $21.125 billion in sales, according to Prospect News data.

"It should be similarly busy," said a syndicate source. "I think we're saying $20 billion for next week, where this week was $20 to $25 billion. It should be on par with this week."

The market is set to be most active in the first half of the week, especially Monday and Tuesday, a source said.

In the secondary, Plum Creek Timberlands, LP's notes have narrowed 55 basis points in trading since they priced on Nov. 8, a source said Friday.

"It's a popular name," the source said.

The new notes due 2021 that Xerox priced earlier in Friday's session firmed over 3 bps in trading, a source said.

General Electric Capital Corp.'s bonds were active on no fresh news, with the company's most recently priced bonds widening, a trader said.

Overall investment-grade Trace volume dropped 35% to $8 billion, a source said.

"It's quiet," a source said. "We've had some activity today, but it hasn't been a busy day. There's been a slow spell now since about April. That seems universal across the board. People are waiting thinking they're going to get higher yields."

The Markit CDX Series 14 North American investment-grade index ended Friday unchanged at a spread of 88 bps, according to Markit Group Ltd.

Treasuries closed higher, sending yields down 5 basis points on the mid to long range of the bond curve in light activity. The 10-year note yield fell 5 bps to 3.22%, and the 30-year bond yield fell 4 bps to 4.31%.

Xerox sells $1 billion

Xerox sold $1 billion of senior notes (Baa2/BBB-) in two maturities by early afternoon, said a source who worked on the trade.

The $300 million of three-year floating-rate notes priced at par to yield three-month Libor plus 82 bps. They were sold inside of talk in the Libor plus 90 bps area.

A $700 million tranche of 4.5% 10-year notes priced at a spread of Treasuries plus 145 bps. Guidance was whispered in the 160 bps area and then revised to the 150 bps area, and they were sold at the low end of that.

"We went out with a very definitive size," the source said. "It was $1 billion no-grow, so I think we had a lot of accounts jump on it."

The sale was massively oversubscribed with about $1.75 billion on the books for the three-year floating-rate notes and about $4.5 billion for the 10-year tranche.

Active bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and UBS Securities LLC.

Proceeds are being used to repay $650 million of Xerox Capital Trust I 8% preferred shares due 2027 and for general corporate purposes.

In the secondary market, the notes due 2021 traded Friday afternoon at 142 bps bid, 139 bps offered, a trader said.

The document management company is based in Norwalk, Conn.

GE Capital wider

In the secondary market, General Electric Capital's 4.625% notes due 2021 traded from 124.5 bps to 127 bps late Friday, a trader said.

"That's slightly wider than where they were this morning," the trader said.

GE Capital's 2.95% notes due 2016, which priced on May 4 at 105 bps over Treasuries, have widened, the trader said.

"It held at the 105 spread for a few days, then Treasuries ran up and it widened out. I was able to buy at 107 the other day. Now it's 108," the trader said. "

The financing arm of General Electric Co. is based in Fairfield, Conn.

Plum Creek narrows

Plum Creek Timberlands' 10-year notes have come in 55 bps in trading since they priced in November, a source said Friday.

The company sold $575 million of the 4.7% notes due 2021 (Baa3/BBB-) to yield Treasuries plus 215 bps.

The notes were quoted trading Friday at 160 bps over Treasuries, a source said.

"Decent spread but not super cheap."

The timberland owner and manager is based in Seattle.

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