No new bonds to end week; coming week seen busy, on watch for BP; Anadarko, Transocean gain

By Andrea Heisinger and Cristal Cody

New York, June 18 - There were no new deals to end the week on Friday, although some said they were happy to have a breather after a busy couple of days.

There were several large deals priced during the week, and there could be more large ones in the coming one.

The week ahead could also bring a $5 billion or larger deal from BP plc. There was no more solid news of the possible debt sale on Friday than after it was floated in news reports on Thursday.

The money would go toward the $20 billion fund from BP to aid clean-up efforts on the Gulf of Mexico coast.

Although timing remains day to day, there are "a bunch" of new deals expected for the coming week, a source said at the end of the day.

Nothing solid has been announced, however, as issuance hinges on the day's market tone at the open.

Mixture of issuers in coming week

The past week saw a resurgence in bond issues from financial names that have not recently priced deals, like Toyota Motor Credit Corp.

There could be a couple more financial sales in the coming week, as well as continued issuance of small industrial deals.

"There's still an appetite for IG paper," a syndicate source said. "Look at last week when everything was oversubscribed."

Sources said on Thursday that if BP does indeed sell a huge issue of notes, people will buy them as long as the price is right. That price is likely to be more in the junk realm despite still the company still being rated investment-grade.

"Everyone will definitely be watching that one," a source said on Friday. "I don't see them getting at done at good levels."

Little secondary action

Trading was extremely light on Friday, though the oil sector fared better on the day, sources said.

Overall investment-grade Trace volume plunged 43% to about $7 billion, according to a market source.

Bonds from both Anadarko Petroleum Corp. and Transocean Ltd., companies that were involved with BP plc in the Gulf of Mexico oilrig that exploded on April 20, were stronger on the light day, a trader said.

The CDX Series 14 North American investment-grade index, which has firmed most of the week, tightened again on Friday, firming 4 bps to 110 bps, a source said.

Treasury prices fell and yields were weaker on Friday.

The yield on the 10-year note eased 3 bps to 3.22%. while the yield on the two-year note ended at 0.71% from 0.70%. The yield on the 30-year Treasury bond eased 2 bps to 4.14%.

"We were little bit weaker but volume was very, very light today," said Mary Ann Hurley, a fixed income trader for D.A. Davidson & Co. "We had no economic stats today, stocks were a little bit higher so we were down on low volume. We have no stats on Monday, too, so people were focusing on supply next week as well as the Fed meeting starting on Tuesday."

No changes are expected from the Federal Reserve's Federal Open Market Committee two-day interest rate policy meeting because of the recent weaker economic statistics, she said.

The Treasury Department plans to auction $40 billion of two-year notes on Tuesday, $38 billion of five-year notes on Wednesday and $30 billion of seven-year notes on Thursday.

Energy bonds firm

Corporate bonds in the oil sector were mostly stronger in trading on Friday, although debt from BP was flat on the day, a trader said.

"BP was relatively unchanged, but Anadarko and Transocean were demonstrably better by 2 to 3 points," the trader said.

Woodlands, Texas-based Anadarko is a minority partner in the well where the oilrig that BP operated exploded on April 20. Anadarko laid the blame for the explosion on BP in media statements on Friday.

Switzerland-based Transocean, the world's largest offshore drilling contractor, owned the Deepwater Horizon oilrig that exploded.

Transocean's 6.8% bonds due 2038 "opened at 89, 90, and went out at 92, 93," the trader said.

BP agreed on Wednesday to set aside a $20 billion fund to compensate victims of the oil spill.

London-based BP is expected to sell up to $10 billion in corporate debt as soon as the upcoming week. On Thursday, a source said that BP's bonds rallied 4to 5 bps in the morning but ended the day without any gains.

CDX drops in June

The widely watched investment-grade CDX index hit its lowest close since May 7 on Thursday, according to a research note released Friday from Moody's Analytics analyst John Lonski.

The index peaked on June 7 at 129.9 basis points before it eased to Thursday's 113.6 bps - its lowest close since May 7's 109.3 spread, he said.

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