Citigroup, JPMorgan, KfW price; Merrill Lynch to price preferreds; secondary spreads tighten slightly

By Andrea Heisinger

Omaha, April 21 - The week began primarily with financial names like Citigroup Inc. and JPMorgan Chase & Co. coming out of blackout to price issues. In the same sector, KfW priced.

Citigroup priced $6 billion in hybrid perpetual non-cumulative preferred stock. The shares have a fixed dividend of 8.4% until 2018, then a floating rate of the greater of three-month Libor plus 402.85 basis points or 7.7575%.

They are priced at par and non-callable for 10 years.

Citigroup Global Markets Inc. was bookrunner.

JPMorgan priced $2.5 billion in five-year notes at Treasuries plus 185 bps.

J.P. Morgan Securities Inc. was bookrunner.

German development bank KfW priced $3 billion in 3.5% five-year global notes at 99.54.

Citigroup, Credit Suisse Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. were bookrunners.

Merrill Lynch & Co., Inc. announced it will price non-cumulative preferred stock at $25 per share.

The deal is being talked at a dividend of 8.625%, a market source said, and is expected to price in the next couple of days.

Merrill Lynch is bookrunner.

An upcoming issue was also announced from Nine Dragons Paper Ltd.

The Chinese company is planning $300 million in five-year senior notes that will price via Rule 144A/Regulation S.

Merrill Lynch is bookrunner.

The roadshow began Monday with pricing possible as early as Tuesday.

Spreads stable

Spreads remained mostly stable to start the week from Friday's levels, a market source said.

"I think we'll see things continue to grind along," the source said. "A lot of industrials are in blackout this week and most of the financials have released earnings so we're going to see a lot more of those."

Bank of America was the latest financial name to announce a large write down on Monday, following in the footsteps of Citigroup and Merrill Lynch last week.

All of this information hasn't dented the investment-grade market much. Volume sits at around $70 billion so far for April, which is a new record, a source said.

"I think we'll have more to talk about tomorrow and the rest of the week," he said.

Another source said Monday wasn't the most constructive day for new issues.

"The macroeconomic background wasn't the best we've seen," he said.

He disagreed slightly with the market seeing primarily issues from financials this week.

"I don't think they'll all come into the market at once," he said. "There are definitely still industrials on the sideline. There are a lot of opportunistic issuers out there still who want to take advantage of the tightened spreads."

"If the tone's decent [Tuesday] it could pick up a bit."

JPMorgan gains in trading

Spreads were slightly wider at the open Monday, but tightened throughout the day.

This was reflected in the secondary market where spreads were seen one to two basis points wider, or unchanged, a source said.

"It's very quiet right now and there's very low volume," he said. "Everybody's focused on banks and financials."

The JPMorgan issue was seen tightening 2 to 3 bps after pricing, the source said.

"It's been quiet all day," he said. "I don't know if it has to do with Passover or the Bank of America earnings, or if people are still digesting from Friday."

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