Rentenbank, SpareBank sell notes; euro zone fears quiet market; CSX, Gap, Google bonds widen

By Andrea Heisinger and Cristal Cody

New York, May 23 - Landwirtschaftliche Rentenbank sold its global bonds on Monday after the deal went over the weekend. It was joined in the market by another AAA rated issuer, SpareBank 1 Boligkreditt AS.

The German development agency Rentenbank sold $1.5 billion of notes due 2016.

SpareBank priced $1.25 billion of five-year covered bonds under Rule 144A.

Primary activity was otherwise non-existent, at least partly due to fears about sovereign debt in the euro zone.

"I think everyone saw equities react this morning," said a syndicate source. Some activity is expected to return on Tuesday, although the week's issuance range is a relatively low at $10 billion to $12 billion compared to the past two weeks that had $25 billion or more.

"It was supposed to be super swamped today," a market source said late in the afternoon. "As soon as we came in this morning, we put a bunch of things off."

The tone didn't worsen throughout the day, the source said, so the supply that was held "might try tomorrow."

Some issuers that aren't pressed for time could wait until after the Memorial Day weekend, but others who are, or need to issue before the end of the month, will likely try to get in this week, the source added.

Overall investment-grade Trace volume rose about 5%, but stayed just under $10 billion on Monday, a market source said.

"Very quiet. There was a little bit of activity in the morning, but it definitely died out in the afternoon," a trader said.

CSX Corp.'s new bonds sold on Friday traded "a little bit wider" in the secondary market on Monday, a trader said.

Macy's, Inc.'s bonds were "unchanged from the run-up last week," while Gap Inc.'s bonds moved out in trading again, a trader said.

"Gap is about 3 basis points wider today."

New 10-year paper from Google Inc. and Walt Disney Co. widened in the secondary on light activity.

The Markit CDX Series 14 North American investment-grade index eased 2 basis points to a spread of 92 bps on Monday, Markit Group Ltd. said.

In other bond activity, bank and financial paper struck a weak tone as well, trading "about 3 to 5 wider," a source said.

Treasuries rose sending yields down but ended the day off the highs on overseas debt fears.

"Today is all about Europe," said RBS Securities Treasuries strategist John Briggs.

Standard & Poor's changed Italy's ratings to negative watch from stable, which followed Friday's downgrade of Greek's debt to junk status by Fitch. Also, worries grew over Spain's debt problems after the country's ruling Socialist party was defeated in local elections.

The 10-year note yield fell 1 point to 3.13%, and the 30-year bond yield dropped 3 bps to 4.27%.

Rentenbank's bonds

Rentenbank sold $1.5 billion of 2.125% five-year notes (Aaa/AAA) by early afternoon to yield mid-swaps plus 14 bps, according to an FWP with the Securities and Exchange Commission.

Bookrunners were Credit Suisse Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Proceeds are being used to finance lending activities including refinancing of existing liabilities.

The German development agency for agribusiness is based in Frankfurt.

SpareBank sells five-years

SpareBank 1 sold $1.25 billion of 2.625% five-year covered bonds on Monday to yield Treasuries plus 85.75 basis points, an informed source said.

The notes (Aaa/AAA) were priced at 99.956 to yield 2.634%. They are non-callable.

The deal was done under Rule 144A.

Bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc. and HSBC Securities Inc.

The commercial bank is based in Stavanger, Norway.

CSX wider

CSX sold $600 million of senior notes (Baa3/BBB) in two tranches on Friday.

The 4.25% 10-year notes sold at a spread of Treasuries plus 115 bps. The notes widened to 117 bps bid, 114 bps offered on Monday, a trader said.

The second tranche, a reopening of 5.5% notes due 2041, priced at a spread of Treasuries plus 125 bps. The bonds also traded wider on Monday at 129 bps bid, 126 bps offered.

The rail transportation company is based in Jacksonville, Fla.

Gap weaker

In late afternoon trading, Gap's 5.95% notes due 2021 widened to 310 bps bid, 303 bps offered, weaker than the quote of 305 bps bid, 295 bps offered seen on Thursday, a trader said.

The notes priced on April 7 at a spread of Treasuries plus 245 bps.

The clothing retailer is based in San Francisco.

Google 10-years

Google's 3.625% notes due 2021, which have widened in trading since they priced on May 16, traded "a basis point wider" on Monday, a trader said.

The 10-year notes were last seen at 64 bps bid, 62 bps offered.

The technology company is based in Mountain View, Calif.

Disney wider

Walt Disney sold $500 million of 3.75% 10-year notes (A2/A/A) to yield Treasuries plus 60 bps on May 16. The notes traded Monday at 63 bps bid, 61 bps offered.

The media conglomerate is based in Burbank, Calif.

Macy's flat

Macy's notes jumped after it regained its investment-grade rating from S&P the previous week.

The 5.9% notes due 2016 traded up 2½ points to 112.75 on Thursday, but were flat in trading Monday, a source said.

The retailer is based in Cincinnati, Ohio.

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