AT&T sells short bonds; Ontario, NIB price; AT&T existing notes firm as overall spreads widen

By Aleesia Forni and Andrea Heisinger

New York, Feb. 7 - Issuance was light on Thursday in the high-grade bond market as AT&T Inc. brought a $2.25 billion sale of short bonds.

The telecommunications company opted to split the sale between $1.25 billion of three-year floating-rate notes and $1 billion of three-year fixed-rate notes.

There was a $250 million sale of 20-year senior InterNotes from General Electric Capital Corp.

Nordic Investment Bank priced $2 billion of three-year notes after the sale went overnight from Wednesday.

The Province of Ontario sold $1 billion of 1.2% five-year notes. This trade follows a similar $1.25 billion offering of 10-year notes priced by the Province of Quebec on Wednesday.

Issuers have been focusing more on shorter maturities and floating-rate notes during the past couple of weeks. Earlier this week, International Business Machines Corp. sold two-year floaters, and Paccar Financial Corp. priced three-year floaters, among other fixed-rate notes with short maturities.

A source said that the rate volatility that could continue for the next year has led issuers to "try to get out ahead with those floaters."

"There's not a lot of yieldy, enticing credit out there," he said.

Few 30-year bonds - or anything longer than 10 years - have been sold so far in 2013, and "there's not a ton of yield out there," the source added.

That is why higher-quality names like AT&T are going for the shorter-dated floaters, while lesser-quality issuers in the BBB range may go for the longer maturities.

Demand for high-grade paper has not diminished, however. Wednesday's $2 billion sale of 3.45% 10-year subordinated notes by Wells Fargo & Co. saw about $6.5 billion of demand, a syndicate source said.

The secondary market saw AT&T's existing notes tighten on the day, though spreads were "wider overall," a trader said near the end of the session.

A market source had seen the Markit CDX Series 18 North American Investment Grade index "unchanged to a tad wider" at midday, and the index closed the session unchanged at a spread of 90 bps.

AT&T offers $2.25 billion

AT&T was in the market with a $2.25 billion sale of three-year notes (A3/A-/A) in two tranches, a market source said.

The sale included $1.25 billion of three-year floating-rate notes priced at par to yield Libor plus 38.5 bps.

A $1 billion tranche of 0.9% three-year notes sold at a spread of Treasuries plus 55 bps.

The bookrunners were BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC and UBS Securities LLC.

AT&T last priced bonds in the U.S. market in a $4 billion offering in three maturities on Dec. 6. That sale included a 0.8% three-year note priced at 50 bps over Treasuries.

The telecommunications company is based in Dallas.

Ontario sells $1 billion

The Province of Ontario priced $1 billion of 1.2% five-year notes (Aa2/AA-/) at a spread of mid-swaps plus 25 bps, or Treasuries plus 40.5 bps, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were Goldman Sachs International, J.P. Morgan Securities plc, Scotia Capital (USA) Inc., TD Securities (USA) LLC, National Bank Financial Inc., BMO Capital Markets Corp., CIBC World Markets Corp. and RBC Capital Markets, LLC.

NIB's short bond

Nordic Investment Bank priced $2 billion of 0.5% three-year notes (Aaa/AAA/) to yield mid-swaps minus 5 bps, a market source said.

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

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

GE sells InterNotes

General Electric Capital sold $250 million of 4% 20-year senior InterNotes at par to yield 4%, according to a 424B2 filing with the SEC.

Agents for the trade were Incapital LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Investment Bank and Wells Fargo Advisors LLC.

The funding arm of General Electric Co. is based in Norwalk, Conn.

Armour plans preferreds

Armour Residential REIT intends to issue series B cumulative redeemable preferred stock, the company said in a prospectus filed with the SEC.

Price talk is around 8%, according to a trader, who added that there was no selling group on the deal.

He saw the issue quoted at $24.58 bid, $24.62 offered in the gray market.

"It's going to be a small deal," he said.

Citigroup, UBS Securities LLC and Deutsche Bank are the joint bookrunners.

Armour will apply to list the new preferreds on the New York Stock Exchange under the ticker symbol "ARRPB."

Armour is a Vero Beach, Fla.-based real estate investment trust.

AT&T tightens

In the secondary market, AT&T's notes due 2019 tightened 1 bp on Thursday, closing the session at 135 bps bid.

The company priced $2.25 billion of the 5.8% notes in January 2009 at 300 bps over Treasuries.

AT&T's bonds due 2039 firmed 7 bps and traded at 167 bps bid near the end of the trading day.

AT&T sold $2.25 billion of the 6.55% notes in February 2009.

Stephanie N. Rotondo contributed to this review

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