SunTrust prices, closing out productive week; Microsoft bonds trade tighter in secondary

By Aleesia Forni and Andrea Heisinger

New York, April 26 - Slightly more than $20 billion of high-grade corporate bonds were priced in the past week as of Friday afternoon, including a new sale by SunTrust Banks Inc.

The Atlanta-based financial services company sold $500 million of 10-year notes to cap a week where many banks priced bonds after reporting first-quarter earnings the previous week.

The terms of the sale were not available at press time.

Issuance is set to ramp up in the coming week, with between $25 billion and $30 billion projected, one market source said.

Another source said, "I don't think we're going to see that much unless someone has something big coming out that no one knows about. We're seeing $15 [billion] to $20 billion."

There are at least five trades expected for Monday's session.

In the preferred stock market, W.R. Berkley Corp.'s new $350 million of 5.625% $25-par subordinated debentures due 2053 freed to trade at 10 a.m. ET, according to a trader.

"It shot up once it freed," he said, to $25.08 bid, $25.17 offered from previous trades around $24.90.

Aspen Insurance Holdings Ltd.'s $275 million of 5.95% fixed-to-floating-rate noncumulative preference shares also freed to trade, he said.

"It's ripping," he said. Early in the session, there was a $25.35 bid for paper, but the last trade he saw around midday was $25.60.

"That was a hair mispriced or else they should have [grown] it," he said. "It was a small deal; not a lot of people got shares."

Both deals priced Thursday.

Meanwhile, BB&T Corp.'s $450 million of 5.2% series G noncumulative perpetual preferreds - a deal that priced Wednesday - was "catching more of a bid." The securities had been hanging around $24.75 on Thursday, which a trader said was a manager. But come Friday, the preferreds were getting "more organic bids," with the trader seeing the issue at $24.80 bid.

"That makes sense compared to where the other BB&Ts are trading," he said, adding that he expected the deal would inch closer to par next week.

The Markit CDX North American Investment Grade index was 1 basis point tighter at a spread of 78 bps on Friday.

Thursday's three-part deal from Microsoft Corp. was tighter across the board during the session, according to one market source.

Regions' terms

Regions Financial Corp. gave the terms of its $750 million sale of 2% five-year senior notes priced to yield 137.5 bps over Treasuries in an FWP filing with the Securities and Exchange Commission.

The split-rated notes (Ba1/BBB-/BBB-) were priced Thursday.

Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds are being used for general corporate purposes including the purchase of 7.75% notes due 2014 and 5.75% notes due 2015 through a tender offer. The proceeds may also be used to redeem common stock or repurchase or redeem other outstanding securities, including trust preferred shares.

Regions was last in the U.S. bond market with a $750 million sale of notes in two tranches on April 21, 2010. That offering included a 5.75% five-year note sold at 350 bps over Treasuries.

The financial holding company for banking and money management subsidiaries is based in Birmingham, Ala.

Microsoft firms

Microsoft's $450 million of 1% five-year notes traded 3 bps better at 29 bps bid, 26 bps offered. The notes were priced at Treasuries plus 32 bps.

Meanwhile, the $1 billion tranche of 2.375% 10-year notes, which was sold at 70 bps over Treasuries, was quoted 1 bp tighter at 69 bps bid, 67 bps offered.

The $500 million of 3.75% 30-year bonds traded 5 bps better compared to levels seen late Thursday at 89 bps bid, 86 bps offered. Microsoft priced the notes at a spread of Treasuries plus 90 bps.

The computer software, services and hardware developer and marketer is based in Redmond, Wash.

Stephanie N. Rotondo contributed to this review

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