ANZ prices, Citigroup reopens bonds, volume plummets; secondary focuses on recent deals

By Andrea Heisinger and Paul Deckelman

New York, June 11 - ANZ Banking Group Ltd. and Citigroup Inc. priced the new deals of the day as volume dipped Thursday. The slowdown wasn't entirely unexpected as there was not much left on the issuance calendar after the glut of the first part of the week.

The tone of the day did not scare issuers away, as it was "pretty much the same" as the past two, a source said. There are no issues set for Friday.

Among the established issues in the secondary arena on Thursday, a market source said the CDX Series 12 North American high-grade index edged upward by 1 basis point to a mid bid-asked spread level of 126 bps.

Advancing issues - which on Wednesday had been about evenly matched with decliners - jumped out to a three-to-two lead on Thursday.

Overall market activity, reflected in dollar volumes, was little changed from Wednesday's levels.

Spreads in general were seen a wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note fell by 10 bps 3.85%.

Much of the markets focus was on the behavior of such new deals as Dell Inc. and International Game Technology Inc., both of which had priced on Wednesday.

ANZ prices government-backed floater

ANZ Banking Group sold $1.5 billion of three-year floating-rate notes that are guaranteed by the Australian government, a market source said.

The notes priced at par to yield three-month Libor plus 28 basis points and were sold via Rule 144A.

Bookrunners were Morgan Stanley, HSBC Securities and ANZ Securities.

The financial services company is based in Melbourne, Australia.

There was "nothing special" about the deal that priced early in the day, a source close to it said.

Citigroup reopens 10-year

Citigroup reopened its 8.5% notes due 2019 late Thursday to add $1 billion. They priced at Treasuries plus 437.5 bps.

This adds to the previous $2 billion issue priced May 15 at Treasuries plus 562.5 bps, bringing the total to $3 billion.

Citigroup Global Markets ran the books for the deal, which is not backed by the Federal Deposit Insurance Corp..

Volume takes dive

The number of new deals took a sharp dive Thursday, as syndicate desks had predicted. Calendars were mostly empty after the rush of sales in the first half of the week.

"I think we're pretty much done" for the week, a syndicate source said. "It's not surprising."

At the beginning of the week, predictions were for a top-heavy calendar, which is precisely what happened.

"The tone was good and people got out there," a source said. "Things weren't bad [today] but there wasn't much to price."

The Citigroup reopening was announced fairly late in the day and priced in short order.

It was a day of financial issues, with the other coming from Australia's ANZ.

A market source said he didn't know why there were only financial deals for the day. "I guess they are kind of leftovers," he said. "[They] just needed to get done."

There are no set issues expected for Friday.

Dell tightens up

In the secondary market, a trader saw Dell Inc.'s 3.375% notes due 2012 having firmed to an offered level of 114 bps over, although no bid side was seen on the bonds.

Dell, a Round Rock, Tex.-based computer manufacturer, priced $400 million of those bonds on Wednesday at 150 bps over as part of a $1 billion two-part offering.

The other half of that mega-deal - Dell's $600 million of 5.875% notes due 2019 - came in to 188 bps bid, 184 bps offered, versus the 195 bps spread over comparable Treasuries at which those bonds had priced.

International Game widens a little

Wednesday's other major deal, at least among the non-financials, was International Game Technology's $500 million offering of 7½% notes due 2019, which priced at 362.5 bps over.

On Thursday, a trader quoted the Reno, Nev.-based gaming industry technology provider's bonds at 358 bps bid, 350 bps offered. That was a little wider than the 352 bps bid, 347 bps offered at which those bonds had been seen on Wednesday - but still a little in from the 362.5 bps at which they had priced

Anadarko improves

A trader saw Anadarko Petroleum Corp.'s new 5.75% notes due 2014 having tightened to 260 bps bid, 255 bps offered, in from the 275 bpd bid, 265 bps offered levels at which they traded earlier in the week, and in still further from the 295 bps over level at which the Woodlands, Tex.-based independent oil and gas exploration and development company had priced its $275 million of five-year bonds, as part of the company's upsized $900 million three-part deal, on Tuesday.

He also saw its 7.95% bonds due 2039 having likewise narrowed to 302 bps bid, 293 bps offered - in from 320 bps bid, 300 bps offered earlier in the week and in still further from the 335 bps level at which that $325 million of bonds had priced.

The third part of the deal - its $300 million of 6.95% notes due 2019 - were trading in the afternoon at 295 bps bid, 290 bps offered, in from 325 bps bid, 319 bps offered earlier in the week, and in as well from the 325 bps level at which the bonds had priced.

Fortune falls

On the downside, a trader said that Fortune Brands Inc.'s new 6.375% notes due 2014 were trading at 350 bps bid, 350 bps offered., unchanged from the 350 bps spread at which the Deerfield Ill.-based producer of alcoholic beverages and other consumer products had priced its $500 million issue on Tuesday.

Those bonds had lately gotten as tight as 337 bps bid, 332 bps offered.

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