Sandy-related absences leave trading 'compressed;' General Dynamics, Caterpillar ready offers

By Sheri Kasprzak and Aleesia Forni

New York, Nov. 1 - Three days of absences and struggles in the wake of Hurricane Sandy have led to compressed trading volume in the corporate markets, according to market sources.

"October ended with Sandy-related absences, keeping trading volume in the corporate markets compressed," said Jody Lurie, corporate credit analyst with Janney Montgomery Scott LLC.

"Even with the effective three-day break at the end of the month, along with 3Q earnings season delaying issuance in the middle of the month, October primary and secondary volumes were fairly robust, though nowhere near the levels of September. Primary volumes ranked fifth for the year, just barely behind January levels, with total non-sovereign debt issuance reaching $141 billion."

On the investment-grade front, the secondary market saw $244 billion in volume for the month, Lurie said.

"November is setting up a choppy start, though we expect activity to pick up starting next week, when the market returns to relative post-Sandy normal," Lurie noted.

General Dynamics prices

General Dynamics Corp. hit the market on Thursday with $2.4 billion of notes (A2/A/A) in three tranches, according to a market source.

The offering included $900 million of notes due in 2017, $1 billion of notes due in 2022 and $500 million of notes due in 2042.

The joint bookrunners for the notes are Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Royal Bank of Scotland and Wells Fargo Securities LLC.

The company intends to use the proceeds for general corporate purposes, as well as to redeem the company's 4.25% 2013 notes, 5.25% 2014 notes and 5.375% 2015 notes.

Based in Falls Church, Va., General Dynamics is an aerospace and defense company.

Caterpillar brings $1.2 billion

In other primary action Thursday, Caterpillar Financial Services Corp. priced $1.2 billion of series G medium-term notes (A2/A/A) in two tranches, said a form 424B3 filed with the Securities and Exchange Commission.

The joint bookrunners were Barclays, J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc.

The sale includes $600 million of notes due in 2015 and $600 million of notes due in 2017.

The three-year notes are due Nov. 6, 2015 and have a 0.7% coupon priced at a spread of Treasuries plus 35 basis points. The notes are priced at 99.908 to yield 0.731%.

The five-year notes are due Nov. 6, 2017 and have a 1.25% coupon priced at a spread of Treasuries plus 55 bps. The notes are priced at 99.865 to yield 1.278%.

Proceeds from the sale will be used for general corporate purposes.

Caterpillar, based in Nashville, is the financial arm of Caterpillar, a manufacturer of construction and mining equipment.

Capital One senior notes

Elsewhere, Capital One Financial Corp. brought $1 billion of senior notes in two tranches, said a form 424B5 filed with the Securities and Exchange Commission.

The offering included $250 million of three-year floating-rate senior notes and $750 million of three-year fixed-rate senior notes.

The notes (Baa1/BBB/) were sold through joint bookrunners Barclays, Credit Suisse Securities (USA) LLC and RBS Securities Inc. The co-managers were HSBC Securities (USA) Inc., Keefe, Bruyette & Woods Inc., Mischler Financial Group Inc. and Muriel Siebert & Co. Inc.

The floating-rate notes are due Nov. 6, 2015, and bear interest at three-month Libor plus 64 bps.

The fixed-rate notes are due Nov. 6, 2015, and bear interest at 1% priced at a spread of Treasuries plus 73 basis points. The notes were priced at par.

A trader quoted the notes at 72 bps bid, 65 bps offered near the end of the session.

Proceeds will be used for general corporate purposes, including the reduction of short-term debt, acquisitions and investments in or extensions of credit to subsidiaries and investments in securities.

Based in McLean, Va., Capital One is a financial services company.

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