FMS prices tight; Freddie Mac passes; EIB on deck; Bank of America bonds firm in secondary

By Aleesia Forni

Virginia Beach, Aug. 27 – FMS Wertmanagement made its way to the primary market on Wednesday, pricing a $1.5 billion offering of three-year senior notes.

The day’s lone new issue sold at the tight end of price talk, which was set in the area of mid-swaps flat.

In other market news on Wednesday, Freddie Mac said that it would pass on issuing Reference Notes on its Aug. 27 announcement date.

In forward calendar news, European Investment Bank announced price talk for a planned $3 billion seven-year offering of notes on Wednesday.

Roughly $3 billion of new issuance has priced so far this week, and sources are expecting the slow pace of primary activity to continue on Thursday.

Issuance is expected to resume in September following the extended Labor Day holiday weekend.

Spreads in the investment-grade secondary market were mostly unchanged during Wednesday’s session.

The Markit CDX North American Investment Grade series 22 index was flat at a spread of 55 basis points.

Similarly, bank and financial paper was flat to slightly tighter.

Bank of America Corp.’s recently priced $1 billion of 1.7% notes due 2017 traded around 3 bps tighter on the day.

The bank’s 4.2% subordinated notes due 2024 also firmed, a market source said.

FMS prices tight

FMS Wertmanagement priced a $1.5 billion offering of three-year senior notes (Aaa/AAA/AAA) at mid-swaps minus 2 bps, or Treasuries plus 18.85 bps, according to an FWP filed with the Securities and Exchange Commission.

Price talk was set in the area of mid-swaps flat.

The notes sold at 99.968 to yield 1.136%.

Citigroup Global Markets Inc., Credit Suisse Securities, Goldman Sachs & Co. and HSBC Securities were the bookrunners.

Proceeds from the sale will be used to refinance existing liabilities in order to replace short-term with long-term funding, and any remaining proceeds will be used for general corporate purposes.

The notes are guaranteed by the Federal Republic of Germany.

The financial services company is based in Munich.

EIB sets talk

The European Investment Bank set price guidance for its planned $3 billion offering of seven-year notes on Wednesday in the area of mid-swaps plus 9 bps, according to a market source.

BofA Merrill Lynch, TD Securities and J.P. Morgan Securities LLC are running the books.

The lender for the European Union is based in Kirchberg, Luxembourg.

Freddie passes

Also on Wednesday, Freddie Mac announced that it would not issue Reference Notes on its Aug. 27 announcement date, according to a company news release.

The government-sponsored enterprise is based in McLean, Va.

Bank of America firms

Bank of America’s $1 billion of 1.7% senior notes due 2017 was quoted 1 bp better on Wednesday at 75 bps bid.

Pricing was at a spread of Treasuries plus 80 bps.

The bank’s 4.2% subordinated notes due 2024 was quoted at 168 bps bid.

The notes priced at 180 bps over Treasuries on Thursday.

Bank of America is a financial services company based in Charlotte, N.C.

Bank/broker CDSs flat to lower

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

Bank of America’s CDS costs ended 2 bps lower at 62 bps bid, 65 bps offered. Citigroup Inc.’s CDS costs declined 1 bp to 63 bps bid, 66 bps offered. JPMorgan Chase & Co.’s CDS costs were flat at 51 bps bid, 54 bps offered. Wells Fargo & Co.’s CDS costs were unchanged at 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs declined 2 bps to 64 bps bid, 68 bps offered. Morgan Stanley’s CDS costs ended flat at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.’s CDS costs were also flat at 72 bps bid, 77 bps offered.

Paul Deckelman contributed to this review.

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