Primary ends week on quiet note; coming week seen tepid; Wells Fargo, financials stronger

By Andrea Heisinger and Cristal Cody

New York, Feb. 11 - There were no new bonds priced to close out the week, keeping with the trend of feast or famine in the investment-grade primary market.

There was about $22.13 billion priced in 15 new deals during the week, according to Prospect News data.

This was more than was expected, and the total was mostly due to several large offerings sold on Wednesday.

"It's been really dull lately, and no one knows when it will change," a source said Friday. "We could see a couple of busy days next week, but nothing definite."

Another source estimated deal volume for the coming week at about $15 billion "give or take a few [billion]."

With most of the volatility in Egypt settling down, the source said he hoped that would stop affecting issuance.

"I think that's maybe why there wasn't any [issuance] yesterday," he said, referring to the mostly empty primary on Thursday. "Everyone wanted to see what would happen."

Overall investment-grade Trace volume slipped 15% to about $13.5 billion, according to a source.

Bonds in the oil and gas sector were mostly unchanged late Friday, while Luxemburg-based steelmaker ArcelorMittal's bonds were "5 basis points wider across the board," a trader said.

Wells Fargo & Co.'s notes were more than 10 bps tighter in the secondary market, a trader said.

The financial sector ended the day about 5 bps better, another trader said.

Elsewhere, CNA Financial Corp.'s credit default swaps were 8 bps stronger on Friday, a trader said.

New debt from News America Inc. and Unilever Capital Corp. was mixed in afternoon trading.

In other data, the Markit CDX Series 14 North American investment-grade index firmed 2 bps to a spread of 80 bps, according to Markit Group Ltd.

Treasuries ended the week with some gains on the mid to longer end of the curve as bond prices absorbed the news of Egypt president Hosni Mubarak's resignation.

"That reduced the flight to quality bid on the shorter end," said Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co.

The 10-year note yield was down 6 bps at 3.63%, and the 30-year bond yield dropped 6 bps to 4.7% on the day.

Wells Fargo firms

Wells Fargo's notes were stronger in trading on Friday, a source said.

Wells Fargo sold $2.5 billion of 3.676% five-year senior holding company notes (A1/AA-/AA-) at a spread of 120 bps over Treasuries on Thursday. By Friday afternoon, the notes had firmed to 107 bps bid, 102 bps offered, a trader said.

The financial services company is based in San Francisco.

CNA Financial CDS better

No secondary trading activity was seen Friday in insurance company CNA Financial's new bonds, but the company's credit default swaps were "8 basis points better on the day," a trader said.

Chicago-based CNA Financial sold $400 million of 5.75% 10-year notes (Baa3/BBB-/BBB-) to yield 215 bps over Treasuries on Wednesday.

News America 10-years wider

News America's new debt was mixed in secondary trading.

The company sold $2.5 billion of notes (Baa1/BBB+/BBB+) on Wednesday, including 4.5% notes due 2021 at a spread of Treasuries plus 95 bps. The notes widened to 103 bps bid, 101 bps offered, a trader said.

The second tranche of 6.15% bonds due 2041, sold at a 150 bps over Treasuries spread, firmed to 147 bps bid, 145 bps offered.

The subsidiary of media company News Corp. is based in New York.

Unilever mixed

The 4.25% notes due 2021 that Unilever Capital sold on Monday were mixed in the secondary market on Friday, a trader said.

The notes priced at 65 bps over Treasuries. "Last I saw was 66, 63," the trader said.

The multi-national company for consumer products is based in Englewood Cliffs, N.J.

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