RBS adds to floaters, GFI bond sale withdrawn; HSBC notes firm; appetite grows for corporates

By Andrea Heisinger and Cristal Cody

New York, Aug. 20 - It was a quiet Friday in the high-grade market with no new issues and one add-on from Royal Bank of Scotland plc priced following a week of decent issuance.

RBS added $150 million to the three-year floating-rate notes it priced on Tuesday.

An upcoming deal from GFI Group Inc. was withdrawn two days after it was announced. The sale was to be $250 million in 10-year senior notes, but the company is looking at alternative structures.

Issuance for the coming week is up in the air, but it should be similar to the past week with companies trying to get deals done before Labor Day, sources said.

One syndicate source said there had been a couple of calls for possible sales Monday or Tuesday, but "nothing too major."

New bonds from banks and financial issuers sold earlier in the week narrowed in secondary trading on Friday, according to sources.

"It's been a very active week," a trader said.

HSBC Bank USA NA's new 4.875% global bank notes firmed 35 basis points in secondary trading. Other new bank paper firmed on the day, including Bank of America Corp.'s 3.7% notes, sources said.

Treasuries fell and pushed yields up as traders prepared for more than $100 billion in supply in the week ahead.

The yield on the 10-year note rose 3 bps to 2.61%. The yield on the 30-year bond rose 1 bp to 3.66%.

Because of the low yields in government bonds, "there's definitely more appetite for high-quality corporate and high yield also," said John Briggs, strategist at RBS Securities Inc.

"Those that can are adding more credit interest for high-quality corporates," he said. "It's a nice pickup when the overall 10-years are 2.60%. You get the additional yield and strong corporate balance sheets, but you don't get the volatility you do in equities, so it's a strong time for corporates."

Overall investment-grade Trace volume fell in quiet trading on Friday to just under $8 billion from more than $13 billion the previous day, according to a market source.

The Markit CDX Series 14 North American investment-grade index was unchanged from the previous day's spread of 109 bps, according to Markit Group Ltd.

RBS adds to floaters

Royal Bank of Scotland added $150 million to its tranche of three-year floating-rate notes, according to an FWP filing with the Securities and Exchange Commission.

The floating-rate notes, as well as two other tranches, were part of a $3.6 billion deal priced by the bank on Tuesday.

The added notes (Aa3/A+/AA-) priced at 100.6324 to yield Libor plus 242 bps. They are guaranteed by the Royal Bank of Scotland Group plc.

The total issuance for the floating-rate notes is $750 million, including the original $600 million priced on Tuesday.

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

The financial services company is based in Edinburgh.

Steady week ahead

One syndicate source said she had "a handful" of deals for the coming week but was unsure of the timing.

"We could have a couple off the bat, but probably not until Tuesday, I would think," she said.

Another source agreed but said that the more high-quality names would probably try to get in earlier in the week rather than later, in case "something happens to the market."

"We've been pretty good for a while," he said. "All it takes is one headline ..."

Some issuers are both trying to take advantage of low interest rates and get in before the Labor Day holiday or the days leading up to it. Despite that, late summer is expected to be somewhat slow.

"Everyone's on vacation," the second source said.

GFI withdraws sale

GFI Group Inc. announced on Friday that it's withdrawing a $250 million sale of 10-year senior notes.

The company and its advisers are looking at alternative structures and may make a note offering on a later date, according to a company press release.

"The decision to withdraw at this time was based on the careful consideration of a number of factors, including alternative structures that have been proposed by potential investors," Michael Gooch, GFI's chairman and chief executive officer, said in the release.

"GFI has recently obtained an investment-grade rating from two ratings agencies and we opportunistically sought to take advantage of the low long-term interest rates in the Treasury market. This offering was intended to provide the company with access to long-term fixed-rate capital on favorable terms but was not intended for our short-term requirements. Our decision to withdraw this particular offering at this time and consider alternative structures has no impact on our current liquidity, where we have significant excess liquid capital."

The notes (/BBB-/BBB) were to be priced under Rule 144A and Regulation S, with closing expected in the week of Aug. 23. The sale was announced on Aug. 17.

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

Bank of America Merrill Lynch and Barclays Capital Inc. had been tapped as bookrunners.

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

HSBC narrows

Secondary activity picked up in HSBC Bank USA's 4.875% global bank notes due 2020 in end-of-week trading, a trader said.

HSBC priced $1.25 billion of the notes (A1/AA-/AA-) on Tuesday to yield Treasuries plus 225 bps.

"It looks like it's performed really well," a trader said. "It's at a spread of 190."

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

BofA firms

Bank of America's new notes firmed in secondary trading on Friday, according to a source.

The banking giant sold $1.5 billion of 3.7% notes due 2015 at Treasuries plus 230 bps on Tuesday.

The notes (A2/A/A+) were seen Friday afternoon at 225 bps on the offer side.

"It's narrowed 3 or 4 basis points, so it's done all right," the source said.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.