Toyota Motor Credit offers floaters; Korea Gas plans bonds; secondary stagnant on low volume

By Andrea Heisinger

New York, July 6 - Investment-grade bond primary markets started off the week Monday with little new issuance, with a small sale from Toyota Motor Credit Corp. comprising the new deals.

An upcoming sale from Korea Gas Corp. was announced, with pricing expected after a roadshow this week.

There was little movement or excitement in the secondary market. Traders in both the financial and industrial sectors reported light volume and little change in outstanding bonds.

Spreads were mixed by late afternoon as Treasury yields were varied with some slightly wider and others slightly better. The five-year note came in by 3 basis points to yield 2.39% while the 30-year bond was out the same amount to 4.35%.

Toyota unit sells floaters

Toyota Motor Credit priced $75 million three-year floating-rate medium-term notes at par to yield three-month Libor plus 100 basis points, according to an FWP filing with the Securities and Exchange Commission Monday.

Banc of America Securities LLC was agent.

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

Korea Gas plans sale

Korea Gas plans to offer a dollar-denominated benchmark-sized bond following a roadshow, a market source said.

Deutsche Bank Securities, J.P. Morgan Securities and Merrill Lynch & Co. will act as bookrunners for the Rule 144A and Regulation S issue.

The roadshow began on Monday in Los Angeles and Singapore, travels to Hong Kong and New York on Tuesday and concludes in Boston and London on Wednesday.

Korea Gas is a Bundang, South Korea-based energy firm.

New deals take vacation

As those who work on syndicate desks and at potentially issuing companies continue vacations from the long weekend, so do new issues. Monday was mostly void of deals, as had been expected at the end of the previous week.

Some were surprised to hear of the small offering from Toyota Motor Credit.

"We should see something tomorrow," a syndicate source said late in the day. "I think everyone just wanted to feel out [the market]."

It is expected there will be low volume in new deals as many companies are in earnings blackouts or have simply already issued.

"There should be a few things, but it's not going to be massive," a source said, adding "maybe tomorrow, maybe Wednesday, probably not much at the end of the week."

There are no specific deals expected, the two sources said.

"It's a matter of what [the market] looks like tomorrow," a source said. "There wasn't much change today."

Trading sectors quiet

Both the financial and industrial sides of the secondary market were quiet as of late afternoon, with no new issues to enter the market and little else trading around, sources said.

There haven't been any upcoming sales announced on the high-grade side, and because of earnings blackouts, many issuers are unable to sell debt.

"We're not even hearing rumors of any new deals," a trader said.

The situation wasn't much more exciting on the financial side of the secondary, a trader in that sector said.

It's "very quiet today," he said prior to the market close. Volume was "lower so far today" compared to the previous week that saw a handful of new deals early and then a steep drop off leading into an abbreviated Thursday.

Despite sitting atop trading in early afternoon, Bank of America Corp. bonds were relatively unchanged for the day, he said.

B of A bond tops trading

An outstanding 7.375% bond due 2014 from Bank of America was at the top of trading early Monday, a secondary source said.

The company has taken over as the top wealth manager in the world, booting UBS from the spot, according to Bloomberg. This move was credited to Bank of America's acquisition of Merrill Lynch & Co.

Bank of America also had the top two traded bonds on Friday, with the 2014 bond trailing another recent issue of notes due 2019.

Bonds from industrial names followed Bank of America's, including one from International Paper Co. and another from Dow Chemical Co.

Bank, broker CDS widen

Credit-default swaps for bank and brokerage names were 5 bps wider across the board, a trader said late Monday.

Jefferies, Cingular lead movers

Financial services company Jefferies Group Inc. and New Cingular Wireless Services Inc. each had bonds posting some of the largest moves of the day as of late afternoon, a source said.

Jefferies saw its 7.75% bond due 2012 tighten 16 bps, as did fellow financial company Lincoln National Corp. with its 8.75% bond due 2019 making the same move.

Cingular's 8.75% due 2031 was about 45 bps wider.

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