Denmark's Arbejdernes sells floaters; primary awaits volatility to diminish; Wal-Mart up

By Andrea Heisinger and Cristal Cody

New York, July 1 - New issue supply in the high-grade bond market dropped sharply on Thursday following an influx of issuance a day earlier. Only Arbejdernes Landsbank AS was reported to tap the market during the session.

The Danish financial services company priced $500 million of three-year floaters that are backed by that country's government.

There wasn't much change in the market, a source said, noting that it was hard to tell with little in the way of issues lined up.

It's more likely that companies are holding off until after the July 4 holiday.

A market source said that investment-grade issuance is down compared to the same period the previous year. There has been about $317 billion priced so far in 2010, while there was $398 billion in the same period in 2009.

This could be mainly because many companies had plenty of cash on their balance sheets at the end of 2009 and haven't needed to issue. There was also little issuance in April and May due to volatility.

No deals are expected to price on Friday.

"I would imagine it will be a ghost town after about noon," a market source said.

New issues tighten

New high-grade debt from Wal-Mart Stores Inc. tightened in the secondary on Thursday, a trader said.

Also in secondary trading, Campbell Soup Co.'s 3.05% notes due 2017 traded stronger early in the day, according to a source.

Overall investment-grade Trace volume slipped 16% to about $9.5 billion as traders take positions ahead of the closely watched U.S. non-farm payroll data on Friday, according to sources.

The CDX Series 14 North American investment-grade index ended the day unchanged at a mid bid-asked spread of 123 basis points, a source said.

U.S. Treasuries pared some of the gains by the end of Thursday.

"Treasuries seemed to sell off on stocks coming back during the day," a trader said.

Yields on the benchmark 10-year Treasury note eased 1 bp to 2.94%; yields on 30-year Treasury bonds ended the day unchanged at 3.89%.

"It's a new month and new quarter. We're heading toward employment numbers and a long weekend," a source said.

Danish bank sells floaters

Denmark's Arbejdernes Landsbank priced $500 million of three-year floating-rate notes at par to yield three-month Libor plus 55 bps, a source away from the sale said late in the day.

The notes (Aaa/AAA) were priced under Rule 144A.

The notes are guaranteed by the government of Denmark.

Bookrunners were BNP Paribas Securities and Nordea.

The financial services company is based in Copenhagen.

Issuance done for week

With no new deals expected for Friday, syndicate sources said they were essentially already closing up shop for the long weekend.

"I think everyone left early today, and tomorrow will be thin[ly staffed]," he said.

A syndicate source at a smaller desk said that there were "still issuers in the pipeline" for the week but that many opted to wait until the coming week.

Weak housing and economic data came out on Thursday morning and didn't help persuade any companies to price bonds.

The previous day saw several new deals from high-quality names, and that made up the bulk of issuance for the week other than a sale Monday from Delta Air Lines Inc.

There is technically not an early close before the July 4 weekend, but many are treating it that way.

Wal-Mart firms

Wal-Mart Stores on Wednesday sold $3 billion of senior unsecured notes (Aa2/AA/AA) in three tranches, which firmed in next-day secondary trading, a source said.

The Bentonville, Ark.-based retailer priced $750 million of 2.25% notes due 2015 at Treasuries plus 53 bps; $1.5 billion of 3.625% notes due 2020 at Treasuries plus 70 bps; and $750 million of 4.875% bonds due 2040 at Treasuries plus 108 bps.

"The new Wal-Marts today - all are tighter from pricing," the source said.

The five-year notes firmed to 49 bps bid, 46 bps offered.

The 10-year notes were tighter on the offer side, according to the source. The notes were seen trading at 71 bps bid, 68 bps offered.

The last tranche of 30-year bonds firmed to 107 bps bid, 96 bps offered.

Campbell 'all bids'

Campbell Soup's new 3.05% senior unsecured notes due 2017 that the company sold the previous day firmed in early morning trading on Thursday, according to a trader in high-grade bonds.

The notes (A2/A/A) priced at Treasuries plus 65 bps and the same afternoon traded tighter at 63 bps bid, 58 bps offered.

"Earlier this A.M.," the notes firmed to 61 bps bid, 57 bps offered, the trader said.

By Thursday afternoon, the notes widened slightly on the bid side to 63 bps over Treasuries, according to the trader.

"I'm seeing all bids, no offers," the trader said.

The processed food company is based in Camden, N.J.

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