RBC, Eksportfinans, Hyundai price, Treasury to sell Citi preferreds; deal maturities grow

By Andrea Heisinger and Cristal Cody

New York, Sept. 29 - The Royal Bank of Canada, Eksportfinans ASA and Hyundai Capital America were among the companies to sell bonds in the high-grade market on Wednesday as the new deal flow slowed even further after a huge amount pricing in recent weeks.

The Toronto-based financial services company priced $1 billion of notes due in 2014 at the tight end of guidance.

The U.S. Treasury announced a sale of up to $2.2 billion in Citigroup Capital XIII trust preferred securities, with pricing expected on Thursday. The securities were sold to the Treasury as part of the Troubled Asset Relief Program.

Norway's Eksportfinans priced a $500 million deal of three-year floating-rate notes.

Another $500 million deal came from Hyundai Capital America, the U.S. funding arm of the Korean car maker. The company sold guaranteed notes due 2016.

Even with the day's sales, the week's issuance is well short of the $20 billion to $25 billion that had been predicted.

One source said the market has "deal fatigue," with so many issues pricing in such a short span of time. With the end of the month and earnings season around the corner, some companies have pulled back and don't need to issue because they have plenty of cash on their balance sheets.

Other than the Citigroup trust preferreds, there should be "light issuance" on Thursday, the source said.

"I just don't think a lot of people need to issue or they're not ready to go," he said. "I don't know when it will pick back up."

Overall investment-grade Trace volume dipped 2% to just under $13 billion, a source said.

The Markit CDX Series 14 North American investment-grade index firmed 2 bps on Wednesday to a spread of 107 bps, according to Markit Group Ltd.

Some companies are looking for longer-term maturities to bring to the market, a source said.

"With the broad cheap yield curve, extending out maturities is looking attractive for a lot of issuers," the source said. "We've seen several cases where issuers are looking to eke out even small amounts of additional duration - doing 10-and-a-half year bonds instead of a straight 10-year."

Elsewhere, U.S. Treasuries fell on Wednesday after comments from Federal Reserve policy makers stemmed expectations of another round of bond purchases called quantitative easing to stimulate the economy.

The 10-year note yield rose 3 bps to 2.5%. The 30-year bond yielded 3.68%, compared to 3.66% on Tuesday.

RBC prices $1 billion

The Royal Bank of Canada sold $1 billion of 1.25% notes due in 2014 (Aaa/AA-) later in the afternoon at 53 bps over Treasuries, a source close to the sale said.

The notes were priced at the tight end of guidance in the range of 53 bps to 55 bps, he said.

Bookrunners were Barclays Capital Inc. and RBC Capital Markets.

Proceeds are being used for general corporate purposes.

The financial services company is based in Toronto.

Citi Capital selling TRUPs

The U.S. Department of the Treasury is selling up to $2.2 billion of Citigroup Capital XIII 30-year trust preferred securities at $25 each, with pricing expected on Thursday, a source close to the deal said.

The junk-rated securities will have a fixed coupon until Oct. 30, 2015 and then a floating-rate coupon until maturity.

Citigroup Global Markets is global coordinator. Bank of America Merrill Lynch, J.P. Morgan Securities, Morgan Stanley & Co. Inc., UBS Investment Bank and Wells Fargo Securities LLC are running the books.

Citigroup Inc. is guaranteeing the notes, and will receive no proceeds from the sale. The securities were sold to the Treasury in 2009 as part of the Troubled Asset Relief Program, with the government selling them now that Citigroup is considered to be on more solid ground.

The funding arm of Citigroup is based in New York City.

Eksportfinans prices floaters

Eksportfinans ASA sold $500 million of three-year global floating-rate notes (Aa1/AA/AA) at par to yield three-month Libor plus 20 bps, according to an FWP filing with the Securities and Exchange Commission.

JPMorgan was lead manager for the sale.

The lender to Norway's export industry and local government is based in Oslo.

Hyundai U.S. arm sells bonds

Hyundai Capital America sold $500 million of 3.75% guaranteed senior notes due 2016 at a spread of 250 bps over Treasuries, a source close to the deal said.

The notes (Baa2/BBB-) are guaranteed by Hyundai Motor Co.

Barclays Capital Inc., Citigroup, HSBC Securities and JPMorgan were the bookrunners.

The U.S. funding arm of Korean car maker Hyundai is based in Irvine, Calif.

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