Hartford Healthcare prices; primary quiets as market focuses on Fed; Dominion Resources better

By Cristal Cody and Aleesia Forni

Virginia Beach, March 19 - The high-grade bond market was muted on Wednesday, as the market focused on the conclusion of the two-day Federal Open Market Committee Meeting.

The Fed announced that it would trim another $10 billion from its bond-purchasing program and also said that it would drop its 6.5% unemployment rate threshold for a rate increase.

In primary market action, Hartford Healthcare Corp. sold a $163 million issue of 5.746% 30-year bonds at Treasuries plus 210 basis points during the session, a market source said.

Pricing was at the tight end of talk.

In the preferred market on Wednesday, Digital Realty Trust Inc. sold $300 million of 7.375% series H cumulative redeemable preferred stock, a market source said.

The notes sold at the tight end of talk, which was set at 7.375% to 7.5%.

With around $14 billion of supply pricing so far this week, it is uncertain whether the week's total will reach earlier predictions of a $20 billion to $25 billion week.

One source noted that the Tuesday session was "a bit of a pause" but expects the pace of issuance to resume in the week ahead.

"Conditions are still strong," the source said late Wednesday.

Investment-grade paper headed out flat to slightly weaker following the Federal Reserve's announcement that the central bank will reduce its monthly bond purchases and may raise rates more quickly than expected, according to market sources.

The Markit CDX North American Investment Grade series 21 index eased 1 bp to a spread of 64 bps.

Hartford Healthcare's new 5.746% bonds due 2044 were not seen in aftermarket trading going out the door, according to an informed source.

In other trading, Dominion Resources Inc.'s 1.25% series A senior notes due March 15, 2017 firmed 1 bp from where the issue priced on Tuesday, a trader said.

Hartford prices tight

Hartford Healthcare priced $163 million of 5.746% bonds (A2/A/A) due April 1, 2044 with a spread of Treasuries plus 210 bps on Wednesday, according to a market source.

The notes sold at the tight end of talk.

Pricing was at 99.999 to yield 5.746%.

Citigroup Global Markets Inc. was the sole bookrunner.

The health services provider is based in Hartford, Conn.

Digital Realty preferreds

Digital Realty Trust launched $300 million of 7.375% series H cumulative redeemable preferred stock, according to a market source on Wednesday.

BofA Merrill Lynch, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Dividends will be paid on the last day of March, June, September and December, beginning June 30. The company cannot redeem the preferreds prior to March 2019 except in the event of a change of control or in an effort to maintain its real estate investment trust status.

The San Francisco-based company intends to contribute proceeds to the operating partnership, which will use the funds to repay borrowings under a global revolving credit facility, to acquire additional properties, for development opportunities and/or for general corporate purposes, including the potential repurchase or redemption of outstanding debt or preferred securities.

Dominion Resources firms

Dominion Resources' 1.25% notes due March 15, 2017 traded slightly better at 52 bps bid, 51 bps offered in the secondary market on Wednesday, a trader said.

The company sold $400 million of the three-year notes (Baa2/BBB+/BBB+) on Tuesday at a spread of Treasuries plus 53 bps.

The energy producer and transporter is based in Richmond, Va.

Bank/brokerage CDS flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.'s CDS costs were flat at 65 bps bid, 69 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 77 bps bid, 80 bps offered. JPMorgan Chase & Co.'s CDS costs declined 1 bp to 59 bps bid, 62 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 37 bps bid, 40 bps offered.

Merrill Lynch's CDS costs fell 1 bp to 71 bps bid, 77 bps offered. Morgan Stanley's CDS costs firmed 1 bp to 90 bps bid, 94 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended flat at 95 bps bid, 98 bps offered.

Paul Deckelman contributed to this review.

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