Apache, Bank of America, RBS, HSBC Bank, ING among financial-heavy deals; HSBC notes firm

By Andrea Heisinger and Cristal Cody

New York, Aug. 17 - New deals were more abundant in the high-grade bond market on Tuesday as those from Apache Corp., Bank of America Corp., Royal Bank of Scotland plc, HSBC Bank USA NA, ING Bank NV and National Australia Bank Ltd. were priced.

The day was heavy on the financial deals from overseas banks, which are taking advantage of low borrowing rates and the fact that a lot of non-financial companies have already issued debt after coming out of earnings blackout.

Among the first to price Tuesday was Apache, which sold an upsized $1.5 billion offering. The deal, increased from a planned $500 million, priced at the tight end of talk and was several times oversubscribed, a source who worked on the sale said.

The 30-year bond sale is being used to help fund an acquisition of assets from BP plc. It was the only reported non-financial bond in the market for the day.

RBS priced an upsized $3.6 billion offering in three tranches, instead of the two that were announced earlier in the day. The issue priced late in the day after the added tranche of floating-rate notes was upsized.

National Australia Bank sold $100 million of three-year floating-rate notes by late afternoon.

The issuance was quickly followed by a $20 million add-on of floaters from Toyota Motor Credit Corp.

Meanwhile, HSBC Bank USA sold its $1.25 billion offering of 10-year bank notes late in the afternoon in line with talk.

The only American financial firm to price bonds, Bank of America, sold $1.5 billion of five-year notes about the same time as the HSBC deal was priced.

Another late sale came from ING Bank, which issued $750 million in five-year notes.

GFI Group Inc. announced its plans to sell $250 million of 10-year notes. They will be done in a private placement under Rule 144A and Regulation S.

The day was more exciting as far as new issue volume when compared to Monday, but most of the deals were in the financial and banking sector.

"It was a little lopsided today, but there were a lot of big trades," a source said. "Some of them just took a while to get done."

The RBS deal garnered surprisingly high spreads and coupon on its floating-rate tranche.

New paper firms

The new high-grade paper from Bank of America and HSBC firmed in secondary trading and may have helped strengthen the financial sector, according to sources.

Goldman Sachs Group, Inc.'s notes due 2020 were "3 to 5 basis points tighter on the day," a trader said.

The Markit CDX Series 14 North American investment-grade index firmed 4 bps to a spread of 107 bps, according to Markit Group Ltd.

Overall investment-grade Trace volume climbed 33% to nearly $13 billion, according to a market source.

Corporate bonds are doing "OK" amid the Treasuries sell-off and stock rally, said Jason Brady, a managing director at Thornburg Investment Management.

"One reason a lot of names have trouble tightening further is because bond yields are at very low levels," he said. "Corporates are probably the best house in a bad neighborhood right now."

Treasuries were sold off on stronger stocks, sending yields up on the first day of the Federal Reserve's resumption of open-market purchases of government debt. The yield on the 10-year note rose 7 bps to 2.63%. The yield on the 30-year bond rose 6 bps to 3.77%.

Apache sells 30-years

Houston-based Apache priced an upsized $1.5 billion of 5.1% 30-year senior unsecured notes (A3/A-/A-) by mid-afternoon at a spread of 140 bps over Treasuries, a source close to the deal said.

The size was increased from a planned minimum of $500 million and a subsequent upsizing to $1 billion. The notes priced at the tight end of guidance in the range of 140 to 145 bps.

It was a "good, strong trade," the source said, adding that it was the only energy name in the market for the day.

Books were "solidly at $5.5 billion," he said.

Active bookrunners were Bank of America Merrill Lynch, BNP Paribas Securities Corp. and Citigroup Global Markets Inc.

Proceeds are going to finance a portion of the $5 billion consideration payable in connection with the $7 billion acquisition of gas and oil fields from BP plc, including repayment of drawings under a bridge facility.

The company last sold bonds on Sept. 26, 2008 in an $800 million sale in tranches with five-year and 10-year maturities.

The 5.1% bonds due 2040 were tighter in trading at 130 bps and later seen in the secondary market at 132 bps bid, 130 bps offered, sources said.

The natural gas and crude oil energy company is based in Houston.

RBS offers $3.6 billion

The Royal Bank of Scotland sold $3.6 billion of senior unsecured notes (Aa3/A+/AA-), reallocated into three tranches, late in the day, a source away from the trade said.

Full terms were not available at press time because of the lateness of pricing.

The deal was initially in two tranches, with three-year floating-rate notes added.

That upsized $600 million tranche of floaters priced at par to yield three-month Libor plus 242 bps. The size was increased from $500 million.

The $1.5 billion of three-year fixed-rate notes priced at a spread of 340 bps over Treasuries.

A second tranche of $1.5 billion in 10-year notes priced at Treasuries plus 562.5 bps.

The notes are guaranteed by the Royal Bank of Scotland Group plc.

RBS Securities was the bookrunner, and proceeds are going for general corporate purposes.

The financial services company is based in Edinburgh, Scotland.

HSBC Bank USA's 10-years

HSBC Bank USA priced $1.25 billion of 4.875% 10-year global bank notes (A1/AA-/AA-) later in the afternoon to yield Treasuries plus 225 bps, a source close to the deal said.

The deal was not upsized and priced in line with guidance in the 225 bps area, she said.

HSBC Securities was the bookrunner.

HSBC's new notes due 2020 tightened 20 bps soon after release for secondary trading, a source said.

The notes priced at Treasuries plus 225 bps and firmed to 205 bps.

"It came with a pretty nice concession," the source said. "They've been doing a bunch of deals lately. The concession was around the range of 25 basis points, so the tightening has taken back most of that concession."

The notes were last quoted late afternoon at 205 bps bid, 200 bps offered, one trader said.

The U.S. subsidiary of HSBC Holdings plc is based in New York City.

ING prices five-years

ING Bank sold $750 million of 3% five-year notes (Aa3/A+/A+) at Treasuries plus 162.5 bps, a source close to the sale said.

Full terms were not available at press time.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and ING were the bookrunners.

The financial services company is based in Amsterdam.

Bank of America sells $1.5 billion

Banking giant Bank of America sold $1.5 billion of 3.7% five-year notes (A2/A/A+) at Treasuries plus 230 bps, a market source away from the sale said.

The source called it an "uneventful trade" because it priced in line with talk and priced fairly quickly.

Bank of America Merrill Lynch ran the books.

The notes due 2015 tightened 2 bps in afternoon secondary trading to 228 bps bid, 226 bps offered, according to sources.

The notes widened slightly to 231 bps bid, 227 bps offered late in the day, a trader said.

The financial services company is based in Charlotte, N.C.

Toyota adds to notes

Toyota Motor Credit added $20 million to its issue of one-year floating-rate medium-term notes, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aa2/AA) priced at par to yield three-month Libor plus 8 bps. The notes are non-callable and have interest paid quarterly.

Total issuance is $120 million, including $100 million priced Monday.

Toyota Financial Services Securities USA Corp. was agent for the add-on.

The U.S. financing arm of Toyota Financial Services is based in Torrance, Calif.

NAB prices floaters

National Australia Bank priced $100 million of three-year floating-rate notes on Tuesday at par to yield three-month Libor plus 75 bps, a market source away from the sale said.

The notes (Aa1/AA) are non-callable and have interest paid quarterly. They were sold under Rule 144A.

Morgan Stanley ran the books.

The financial services company is based in Melbourne, Australia.

GFI plans 10-year sale

GFI Group is planning a $250 million offering of 10-year senior notes, according to a press release.

The notes (/BBB-/BBB) will be priced under Rule 144A and Regulation S.

Proceeds will be used to repay outstanding amounts under an existing credit agreement, to repay existing senior secured notes due on Jan. 20, 2013 and to fund all related premium and transaction expenses.

Bookrunners are Bank of America Merrill Lynch and Barclays Capital.

The deal is expected to close the week of Aug. 23.

The brokerage and trade execution company is based in New York City.

Bank, brokerage CDS prices fall

A trader who follows the credit-default swaps market said that the cost of protecting holders of bonds issued by major banks such as Bank of America, Citigroup and JPMorgan Chase against a possible event of default fell 3 bps to 6 bps.

The CDS prices for paper of major investment banking companies such as Goldman Sachs and Morgan Stanley were 3 bps to 5 bps lower.

Paul Deckelman contributed to this report

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