Macquarie Group, ING Bank, Irish Life & Permanent price bonds; Motiva up again; spreads ease

By Andrea Heisinger and Cristal Cody

New York, Jan. 7 - Irish Life & Permanent plc, ING Bank NV and Macquarie Group Ltd. continued the week's trend of multi-national issuers on Thursday.

Domestic names are on the docket for the coming week after spending a few days sizing up the market, a source said after the market close.

Irish Life sold $1.75 billion in three-year notes that are backed by the Irish government.

Netherlands-based ING Bank sold $1.75 billion of notes in two short-maturity tranches. The sale was announced on Wednesday but went overnight to price to gain a more diverse selection of investors, including buyers from Asia and Europe.

Australia's Macquarie Group priced $1 billion of 10-year notes.

All of the deals were priced fairly early in the day.

There is "not much to happen" on Friday, a source said.

Spreads in secondary trading moved out slightly on Thursday, according to sources.

One trader said that "spreads were a little wider today."

In the meantime, a source said there's "still good demand in short paper - seven years and in."

According to a market source, the widely-followed CDX Series 13 North American high-grade index widened 2 bps to a mid bid-asked spread level of 79 bps.

Advancing issues barely stayed ahead of decliners, and overall market activity, as reflected in dollar volumes, fell about 9%.

Overall, "Trace volume is pretty good - at $9.6 billion so far today," a source said.

Meanwhile, the yield on the benchmark 10-year Treasury note eased early Thursday before it ended unchanged at 3.82%. The yield on the 30-year bond tightened 1 bp to 4.68%.

"Ten-year T-notes are yielding 3.84%, up 2 bps from yesterday's close," a source said early in the day. "The dollar is higher across the board. In the wake of yesterday's FOMC minutes, Fed fund futures have pushed back the first rate hike to the September meeting and expect the year-end rate to be 50 bp."

In secondary trading, bonds from Motiva Enterprises LLC continued to firm on Thursday. In addition, high-grade issuers in the chemicals sector are expected to stay on top in the new year.

Irish Life sells short bond

Irish Life & Permanent sold $1.75 billion of 3.6% three-year senior notes at mid-swaps plus 165 bps.

They are backed by the Irish government and were sold under Rule 144A.

Deutsche Bank Securities and J.P. Morgan Securities ran the books.

The financial services and insurance company is based in Dublin, Ireland.

The sale was "of high interest" to investors, a source close to it said. He credited this to the government guarantee attached to the deal.

"I don't even remember the last time they sold notes," he said, referring to the company's issuance in the U.S. market.

Macquarie offers $1 billion

Macquarie Group sold a benchmark $1 billion of 6% 10-year notes at Treasuries plus 220 bps, a source close to the sale said.

They were offered under Rule 144A and Regulation S.

Barclays Capital, HSBC Securities, J.P. Morgan Securities and Macquarie Group were the bookrunners.

Proceeds are being used for general corporate purposes.

The investment bank and financial services company is based in Sydney, Australia.

Financials continue market rush

Banks from overseas took over issuance on Thursday because they saw a continued opportunity to sell in the U.S. market, a source said.

"They're basically jumping in because they can," a syndicate source said. "They are getting a good deal."

The source added that "so are investors," but that he didn't know how long the foreign financial names could corner the investment-grade market.

Analysts had said at the end of 2009 that financials would come on strong in the first part of 2010, as many companies didn't need to issue debt because they had done so opportunistically in the past year.

"It's still a lot of 'this looks good' going on," a market source who worked on one of the day's deals said.

"I think they saw everyone else [price] this week, and figured they would too if they could."

Friday is expected to see little issuance, but things should pick back up in the coming week, sources said.

ING prices two tranches

ING Bank sold $1.75 billion of notes in two tranches.

A $750 million tranche of two-year floating-rate notes priced at par to yield three-month Libor plus 63 bps.

The $1 billion of 2.65% three-year notes priced at Treasuries plus 115 bps.

The notes were priced via Rule 144A.

Deutsche Bank Securities, Goldman Sachs & Co. and ING Securities were bookrunners.

The unit of financial services company ING Groep NV is based in Amsterdam, the Netherlands.

Motiva tightens

In the secondary, the two tranches of bonds priced by Motiva on Wednesday continued to firm Thursday, according to sources.

"They're tighter again," a trader said.

According to one source, Motiva's 5.75% 10-year extendible notes tightened to 155 bps over Treasuries from 158 bps over the day before. The notes priced early Wednesday at 200 bps over.

Also, Motiva's 6.85% 30-year bonds, which priced early Wednesday at 225 bps over, firmed to 175 bps over Treasuries from 177 bps bid at Wednesday's close.

Motiva is a Houston-based joint venture between Shell Oil Co. and Saudi Refining.

In other industrials, according to a market source, International Paper Co.'s 9.375% 2019 bonds were quoted at 194 bps over Treasuries trading on a volume of about $84 million. International Paper's 7.95% eight-year bonds also were reported at 195 bps over.

The Memphis-based paper and packaging company expects to release its fourth-quarter and full-year earnings on Feb. 3.

Citigroup 8.5% bonds widen

In the financials sector, New York-based Citigroup Inc.'s 8.5% bonds due 2019 widened 5 bps to 222 bps over in secondary trading, a market source said Thursday.

Dow narrows 3 bps

According to one source, Dow Chemical Co.'s 8.55% nine-year bonds tightened to 187 bps over from 190 bps over the day before.

Midland, Mich.-based Dow Chemical manufactures and sells chemicals, plastics, agricultural products and other services across the world.

Standard and Poor's Ratings Services credit analyst Kyle Loughlin said Thursday in a release that high-grade issuers in the chemicals sector have an improved outlook ahead despite economic troubles in other industries.

"Among investment-grade companies, the situation is particularly impressive as operating cash flow to debt metrics for roughly 55% of these issuers are at or above expectations for the ratings," Loughlin said. "We believe that current economic conditions are unlikely to challenge any rated investment-grade issuers."

More upside for Zions

A trader said that the Zions Bancorporation 7¾% notes due 2014 "continue to be pretty active," trading between 90 and 901/2, which he called up from levels they held several days ago.

He said that the bonds firmed on "not huge volume" - perhaps around $4.5 million, with the bulk of activity coming in a range of 901/4-91, although he saw some odd lots trading higher.

Considered a five-B credit, Zions - whose bonds are mostly unrated by Moody's Investors Service, are rated BB+, BBB- or not rated by Standard & Poor's and are mostly rated BBB by Fitch Ratings - attracts interest from both the high-grade market as crossover players look for yield, and from junk investors seeking to add a little quality to their portfolios.

"It's just interesting," he noted - those bonds are getting more interest [from investors] while at the same time, the equity is up big over the last couple of days."

He observed that the Salt Lake City, Utah-based regional banking company's Nasdaq-traded shares have also been going up each day -- $1.20 on Wednesday, and another $1.68, or 11.20% on Thursday, to end at $16.68. At the beginning of the year, he further pointed out, the shares were trading in the mid-$13 level, and have jumped around $3 in just four sessions, with Thursday's showing about four to five times the average volume.

However, he had heard no specific news that might explain such a sharp rise, such as takeover chatter or another positive development.

He said that "earnings are coming out later in the month, so I guess it's the quiet period for the company."

-Paul Deckelman contributed to this report

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