Goldman Sachs prices post-earnings; Zoetis does first offering; Goldman, Bank of America busy

By Aleesia Forni and Andrea Heisinger

New York, Jan. 16 - Sales of bonds from Goldman Sachs Group Inc. and Pfizer Inc. spinoff Zoetis Inc. hit the high-grade bond market on Wednesday as earnings announcements continued.

Goldman Sachs hit the primary with a $6 billion deal of bonds in three maturities after announcing earnings of $2.9 billion for the fourth quarter of 2012. The financial giant earned $7.2 billion for all of 2012, which was a leap from the $2.5 billion the previous year.

Zoetis priced $3.65 billion in four maturities under Rule 144A and Regulation S. It was the first bond sale for the animal health unit of Pfizer.

A source said the sale garnered "more than $30 billion or so" of investor interest by the times the books closed and despite the spreads narrowing 30 basis points or more from initial talk.

There was a $100 million trade of five-year floating-rate notes from Wells Fargo & Co.

There also was the launch of $300 million in series L perpetual $25-par preferred stock shares from Vornado Realty Trust. Pricing is expected on Thursday morning, a source said.

A sale of preferreds was also announced by CapLease, Inc.

Momentum from the Goldman Sachs and Zoetis bond sales is expected to bleed into Thursday, sources said.

"I would think we'll see some more opportunistic deals coming in after earnings," a source said, referring to more trades from banks after announcing Q4 numbers.

Bank of America Corp. and Citigroup Inc. are among those set to give earnings ahead of the close Thursday.

"BofA already did theirs last week, but I would think we'll see something from Citi," the source said.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 89 bps on Wednesday.

Bank of America's 7.375% notes due 2014 was among the day's most active issues, and the notes closed the session flat from levels seen Tuesday.

In other trading, Goldman Sachs' 6.75% bonds due 2037 were particularly busy, tightening 2 bps on the day.

Investment-grade bank and brokerage credit default swaps costs mostly declined on Wednesday.

Bank of America's CDS costs were 1 bp wider at 117 bps bid, 121 bps offered. Citi's CDS costs were 1 bp wider at 117 bps bid, 121 bps offered. J.P. Morgan's CDS costs also declined 1 bp to 80 bps bid, 84 bps offered. Wells Fargo's CDS costs rose 1 bps to 73 bps bid, 77 bps offered.

Merrill Lynch's CDS costs were 1 bp wider at 117 bps bid, 122 bps offered. Morgan Stanley's CDS costs declined 1 bp to 164 bps bid, 168 bps offered. Goldman Sachs' CDS costs were 1 bp tighter at 144 bps bid, 147 bps offered.

Zoetis prices first bonds

Zoetis was in the market with a $3.65 billion sale of senior notes (Baa2/BBB-/) in four tranches, a market source said.

It was the first bond offering for the issuer.

A $400 million tranche of 1.15% three-year notes sold at a spread of Treasuries plus 80 bps. Pricing was tighter than talk in the 125 bps area.

The $750 million of 1.875% five-year notes priced at 115 bps over Treasuries. The tranche sold tighter than talk in the 150 bps area.

There was $1.35 billion of 3.25% 10-year notes priced at a spread of Treasuries plus 145 bps. Pricing was tighter than guidance in the 175 bps area.

Finally, a $1.15 billion tranche of 4.7% 30-year bonds sold at Treasuries plus 175 bps. The bonds were also priced lower than talk in the 205 bps area.

Pricing was done via Rule 144A and Regulation S.

Bank of America Merrill Lynch, Barclays and J.P. Morgan Securities LLC were bookrunners.

Zoetis is an animal health subsidiary of Pfizer Inc., based in New York City.

Goldman's $6 billion trade

Goldman Sachs Group tapped the market for $6 billion of new and reopened bonds (A3/A-/A) in three tranches, a market source said.

The New York City-based financial services company reopened its 1.6% notes due Nov. 23, 2015 to add $1 billion. Pricing was at a spread of Treasuries plus 115 bps.

Total issuance of the notes is $2.25 billion including $1.25 billion priced on Nov. 15, 2012 at 130 bps over Treasuries.

There was $2.75 billion of 2.75% five-year notes sold at 165 bps over Treasuries.

A third part was $2.25 billion of 10-year notes priced at Treasuries plus 185 bps.

Full terms of the trade were not available at press time.

Goldman Sachs & Co. was bookrunner.

Proceeds are being used for general corporate purposes.

Wells Fargo does floaters

Wells Fargo priced $100 million of five-year floating-rate medium-term notes at par to yield Libor plus 60 bps, according to a 424B5 filing with the Securities and Exchange Commission.

The bookrunner was Wells Fargo Securities LLC.

The financial services company is based in San Francisco.

Vornado launches preferreds

Vornado Realty Trust has launched a $300 million offering of $25-par series L perpetual cumulative redeemable preferred stock, with pricing expected early Thursday, a source close to the trade said.

Talk at midday was in the 5.5% area, a trader said. The shares were launched at 5.4%, the source said.

Bookrunners are Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being contributed to the company's operating partnership in exchange for preferred units. The operating partnership will use proceeds for general corporate purposes including payment of the redemption or repurchase price for preferred stock and units.

Vornado, a real estate investment trust based in New York City, will apply to list the preferreds on the New York Stock Exchange.

CapLease to price $25-pars

CapLease is preparing a sale of 7.25% $25-par series C cumulative redeemable preferred stock shares, according to a 424B5 filing with the Securities and Exchange Commission.

MLV & Co. is bookrunner for the sale.

Proceeds are being used for general corporate purposes, primarily for the repurchase or redemption of series A preferred stock.

CapLease, a New York City-based real estate investment trust of commercial real estate properties, will apply to list the shares on the New York Stock Exchange under "LSEPrC."

Bank of America unchanged

The secondary market saw Bank of America's 7.375% notes due 2014 trade flat at 100 bps bid on Wednesday.

The bank priced $3 billion notes due 2014 at Treasuries plus 537.5 bps on May 8, 2009.

Goldman Sachs firms

Goldman Sachs' 6.75% bond due 2037 closed the session at 282 bps bid, 2 bps tighter compared to Tuesday's levels.

Goldman priced the $2.5 billion bond at 190 bps over Treasuries in September 2007.

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