Iceland, New Brunswick sell new paper, Texas Gas reopens; Nokia widens, Citi add-on firms

By Andrea Heisinger and Cristal Cody

New York, June 9 - The Province of New Brunswick and the Republic of Iceland each sold dollar-denominated bonds on Thursday as corporates partly took a backseat.

There was a sale in three tranches late in the day from split-rated CenturyLink, Inc. The tranches included new six- and 10-year notes along with a reopening of 7.6% bonds due 2039.

A source close to the deal said that the bonds (Baa3/BB/BBB-) still hadn't priced at 5:30 p.m. ET, but were expected to soon. Terms were not available at press time.

The diversified communications company sold bonds to help pay for its merger with Savvis Inc.

Texas Gas Transmission LLC reopened an issue of notes due 2021 to add $115 million. It brings the total outstanding to $440 million.

New Brunswick priced an upsized $750 million of seven-year bonds in line with guidance. The deal was upsized from $500 million, a source said.

The province was joined by a sovereign sale from Iceland. The beleaguered country sold $1 billion of five-year notes at the low end of guidance given on Wednesday.

The day was mostly full of lower-rated names on the corporate side, and that could be because many better-rated companies issued before spreads began to widen back out.

"We saw a lot of better quality [companies] last month, and now we have some of the BBB names that are still happy to get these levels," a source said.

Corporate issuance has been slow throughout the week and comprised mostly of BBB rated energy names.

The day's tone was promising, a syndicate source said, but there weren't many corporate names stepping up to sell paper.

"We had strong equity markets, right?" said the source. "It kind of retraced at the end of the day. There were a lot of spreads widening."

Overall trading volume slipped 9% to about $13 billion.

In the secondary market, Nokia Corp.'s 10-year notes widened another 5 basis points while the longer bonds stayed flat after moving out earlier in the week on the company's downgrade by Fitch Ratings.

Citigroup Inc.'s five-year notes reopened the previous day traded tighter in the secondary market, according to a trader.

Treasuries fell on better economic data, sending yields up the mid-range of the bond curve. The benchmark 10-year note yield rose 5 bps to 2.99%. The 30-year bond yield rose 2 bps to 4.21%.

Iceland sells five-years

Iceland priced $1 billion of 4.875% five-year notes to yield mid-swaps plus 320 bps, a market source said.

The sovereign has not sold bonds for "several years," one syndicate source said. The sale was roughly two times oversubscribed, the market source said.

The notes (Baa3/BBB-/BB+) priced at the tight end of guidance given on Wednesday in the mid-swaps plus 325 basis points area.

The sale was done under Rule 144A and Regulation S.

Barclays Capital Inc., Citigroup Global Markets Inc. and UBS Securities LLC were bookrunners.

The issuer is based in Reykjavik.

New Brunswick upsizes

The Province of New Brunswick sold an upsized $750 million of 2.75% seven-year bonds (Aa2/AA-) by mid-afternoon at a spread of mid-swaps plus 35 bps, a market source said.

The notes sold in line with guidance in the mid-to-high 30 bps over mid-swaps area, the source said. The size was increased from $500 million.

Bookrunners were Bank of America Merrill Lynch, CIBC World Markets and RBC Capital Markets LLC.

Proceeds are being added to the province's consolidated fund and used for general purposes, or applied to the purchase of securities issued by the New Brunswick Electric Finance Corp.

The issuer is based in Fredericton, Canada.

Texas Gas reopens notes

Texas Gas Transmission reopened its issue of 4.5% notes due 2021 to add $115 million, according to a press release and market source.

The notes (Baa1/BBB) were sold at 101.428 and priced under Rule 144A and Regulation S.

Total issuance is $440 million, including $325 million sold on Jan. 13 at 120 bps over Treasuries.

Bookrunners were Barclays Capital Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC.

Proceeds will be used to redeem $115 million of 5.5% senior notes due 2013.

The interstate natural gas transportation and storage subsidiary of Boardwalk Pipeline Partners, LP is based in Houston.

Nokia settles weaker

Nokia's debt stayed weak in trading, but some of the drop had started to settle by late Thursday, a trader said.

On Tuesday, the notes due 2019 widened 70 bps, and the company's bonds due 2039 widened 45 bps after Fitch downgraded the company two notches to BBB- from BBB+.

The 5.375% notes due 2019 traded 10 bps wider on Wednesday and another 5 bps wider on Thursday at 170 bps bid, 160 bps offered.

Nokia's 6.625% bonds due 2039 were unchanged from Wednesday at 290 bps bid, 280 bps offered.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

Citi firmer

Citigroup's 3.953% five-year notes reopened traded tighter on Thursday, a trader said.

The financial services company priced $1.875 billion in a remarketing of junior subordinated debentures (A3/A/A+) at a spread of Treasuries plus 200 bps.

The notes firmed to 198 bps bid, 195 bps offered on Thursday.

Citigroup's other notes traded wider, according to a bond source. The 5.5% notes due 2014 widened to 212 bps from 193 bps the previous day.

The financial services company is based in New York City.

Bank, broker CDS mixed

The cost of protecting holders of big-bank paper against a possible event of default was seen 2 bps wider to 4 bps tighter, according to a source.

The CDS costs for holders of bonds issued by large investment banking companies was quoted 2 bps to 4 bps tighter.

"Wells Fargo went out 2 bps, everything else went in," trader said.

Stephanie N. Rotondo contributed to this review

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