Wells Fargo, upsized ANZ, ING price as yields rise; bank paper tightens; recent deals firm

By Aleesia Forni and Andrea Heisinger

New York, Feb. 6 - Issues from sovereign and financial names made up the bulk of high-grade bond issuance on Wednesday as Treasury yields rose.

Some investors sought out high-yield bonds as investment-grade corporate paper was more scarce, a source said.

Wells Fargo & Co. was in the market with a $2 billion trade of 10-year notes.

A $1.25 billion trade of three-year bonds was done by Australia and New Zealand Banking Group Ltd. The size was increased from $750 million.

ING U.S. Inc. sold an upsized $1 billion of five-year notes, while New York Life Global Funding priced an upsized $400 million of three-year paper. Both trades were done under Rule 144A and Regulation S.

ING doubled the size of its trade from $500 million.

The Province of Quebec sold $1.25 billion of three-year global notes by early afternoon.

Another sovereign, the International Bank of Reconstruction and Development, priced $5 billion in maturities of 2016 and 2023.

A sale of three-year notes was announced by the Nordic Investment Bank.

A $250 million sale of $25-par perpetual preferred stock was priced by General Growth Properties Inc.

The day's issuance bumped the week's volume into the $10 billion to $15 billion range that was predicted. So far, there's been roughly $11 billion of corporate bonds sold, a source said.

"We may have some more tomorrow, but nothing too big," the source said. Some of the day's issuers, such as Wells Fargo, were in the market opportunistically before yields climb higher, he added.

The Markit CDX Series 18 North American Investment Grade index widened 2 basis points to a spread of 90 bps.

The secondary bond market saw Tuesday's issuances from International Business Machines Corp. and Imperial Tobacco Group plc firm on Wednesday, a trader said.

Meanwhile, bank paper from J.P. Morgan, Merrill Lynch and Citigroup also traded better on the day, according to a market source.

J.P. Morgan's 6.3% notes due 2019 were 1 bp tighter at the session's close, while Merrill Lynch's 6.875% notes due 2018 firmed 9 bps.

The 6.375% notes from Citigroup due 2014 were also 9 bps tighter near the end of the day.

Investment-grade bank and brokerage credit default swaps costs rose on Wednesday.

Bank of America's CDS costs widened 4 bps to 118 bps bid, 123 bps offered. Citi's CDS costs were 2 bps wider at 114 bps bid, 118 bps offered. J.P. Morgan's CDS costs also widened 2 bps to 84 bps bid, 87 bps offered. Wells Fargo's CDS costs rose 2 bps to 74 bps bid, 77 bps offered.

Merrill Lynch's CDS costs were 2 bps wider at 113 bps bid, 118 bps offered. Morgan Stanley's CDS costs rose 2 bps to 148 bps bid, 153 bps offered. Goldman Sachs' CDS costs widened 3 bps to 139 bps bid, 144 bps offered.

ANZ upsizes

Australia and New Zealand Banking Group priced an upsized $1.25 billion offering of 0.9% three-year notes (Aa2/AA-/) to yield Treasuries plus 57 bps, according to a market source.

The size was increased from $750 million, the source said. Pricing was at the low end of talk in the 60 bps area, a source said.

Citigroup Global Markets Inc., Goldman Sachs & Co. and ANZ were the bookrunners.

The financial services company is based in Melbourne, Australia.

Wells Fargo sells 10-years

Wells Fargo sold $2 billion of 3.45% 10-year senior subordinated notes (A3/A/) at a spread of Treasuries plus 150 bps, an informed source said.

Wells Fargo Securities LLC was bookrunner.

Wells Fargo was last in the U.S. bond market with a $1.25 sale of five-year notes on Dec. 18, 2012.

The financial services company is based in San Francisco.

ING offers $1 billion

ING U.S. was in the market with a $500 million sale of 2.9% five-year senior notes (Baa3/BBB-/BBB-) priced to yield Treasuries plus 210 bps, a market source said.

The sale was done under Rule 144A and Regulation S. There is a guarantee by Lion Connecticut Holdings Inc., a subsidiary and U.S. holding company of ING U.S.

Bookrunners were Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc.

Proceeds will be used for general corporate purposes, including repayment of commercial paper and amounts owed under a term loan agreement.

The branch of ING was last in the U.S. bond market with an $850 million sale of 10-year notes on July 10, 2012.

The U.S.-based retirement, investment management and insurance company is a unit of Amsterdam-based ING Groep NV.

NY Life's $400 million

New York Life Global Funding priced $400 million of 0.8% three-year notes at a spread of Treasuries plus 45 bps, a source close to the offering said.

The size of the trade was increased from $300 million.

The notes (Aaa/AA+/AAA) were sold under Rule 144A and Regulation S.

Barclays, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were bookrunners.

The funding unit of New York Life Insurance Co. is based in New York City.

IBRD prices two tranches

The World Bank's International Bank of Reconstruction and Development sold $5 billion of notes (Aaa/AAA/AAA), a market source said.

There was $4.25 billion of 0.5% three-year bonds sold at a spread of mid-swaps plus 5 bps.

A $750 million tranche of 2.125% 10-year notes priced at 12 bps over mid-swaps.

Bookrunners were BNP Paribas Securities Corp., Goldman Sachs & Co., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC.

The issuer offers loans to developing countries and is based in Washington, D.C.

Quebec's short bond

The Province of Quebec priced $1.25 billion of 2.625% 10-year global notes (Aa2/A+/AA-) on Wednesday to yield mid-swaps plus 60 basis points, or Treasuries plus 68.5 bps, a source away from the trade said.

Pricing was at 99.59. There is no call option.

BofA Merrill Lynch, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and RBC Capital Markets LLC were the bookrunners.

Proceeds will be added to the Consolidated Revenue Fund of Quebec and used for general expenses.

NIB preps notes

Nordic Investment Bank announced a sale of three-year bonds (Aaa/AAA/), a market source said.

The source said he had not seen the notes price as of the market close Wednesday.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and RBC Capital Markets LLC are on the books.

The financier for five Nordic countries is based in Helsinki, Finland.

General Growth preferreds

General Growth Properties sold $250 million of 6.375% series A cumulative redeemable perpetual preferred stock on Wednesday.

Price talk was around 6.5%, according to a trader at midday. The deal is unrated.

"They pretty much boxed everybody out, there's no selling group," a trader said, seeing a $24.85 bid for paper in the midday gray market.

Another source pegged the issue later in the day at $24.89 bid, $24.93 offered.

Morgan Stanley & Co. Inc., BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunning managers.

General Growth intends to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "GGPPA."

Proceeds will be used for general corporate purposes, including the repayment of a portion of borrowings under a revolving credit facility, the repayment of mortgages and due debts.

General Growth is a Chicago-based real estate investment trust focused on shopping centers.

IBM notes firm

IBM's $1 billion tranche of 1.25% five-year notes was quoted 3 basis points better at 44 bps bid, 41 bps offered, a trader said.

The notes were sold at a spread of Treasuries plus 47 bps.

The sale also included a $1 billion tranche of two-year floating-rate notes, which was sold at par to yield Libor minus 2 bps.

The information technology and computer company is based in Armonk, N.Y.

Imperial Tobacco tighter

Meanwhile, Imperial Tobacco's $1.25 billion of 2.05% five-year notes was quoted 3 bps better at 117 bps bid, 114 bps offered following Tuesday's pricing with a spread of Treasuries plus 120 bps.

The tranche of $1 billion of 3.5% 10-year notes also traded 3 bps tighter at 147 bps bid, 144 bps offered.

The Bristol, England-based maker of cigarettes and tobacco products priced the notes at 150 bps over Treasuries.

J.P. Morgan better

The secondary saw the $3 billion 6.3% issue from J.P. Morgan due 2019 tighten 1 bp to 188 bps bid.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Merrill Lynch firms

In other trading, Merrill Lynch's 6.875% notes due 2018 firmed 9 bps to 181 bps bid near the end of New York's session.

On April 22, 2008, the bank priced $5.5 billion ten-year notes at 320 bps over Treasuries.

Citi notes tighten

Citigroup's 6.375% notes due 2014 were quoted 9 bps better at 84 bps bid.

The bank priced $2.5 billion five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

Stephanie N. Rotondo contributed to this review

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