Dexia Credit Local, OeKB, PSE&G price deals, Bank of England plans sale; Goldman Sachs firms

By Andrea Heisinger and Cristal Cody

New York, March 2 - Dexia Credit Local, Oesterreichische Kontrollbank AG and Public Service Electric & Gas Co. priced bonds on a busy Tuesday for investment-grade issues.

In addition to the straight investment-grade deals, there were also sales from the Export-Import Bank of Korea and the Republic of South Africa on the emerging markets side.

Dexia Credit Local was the last deal to price for the day, totaling $4 billion in two tranches. The sale had a $1.75 billion tranche of three-year floating-rate notes and $2.25 billion of three-year notes.

Public Service Electric & Gas got its $300 million sale of 30-year bonds done quickly, with pricing by early afternoon.

OeKB was one of the first issuers to price its bonds for the day, with a $1.25 billion deal of three-year notes that are guaranteed by the Republic of Austria.

The Bank of England announced it will sell three-year notes to pad its foreign-exchange reserves, a source said.

New bond deals are expected to be "about equal" to Tuesday's on Wednesday, a source said.

"I wouldn't think we're going to be flooded."

There was little change in the primary market's tone at the end of the day, he said.

Volume proved better in the secondary high-grade market on Tuesday, and some paper continued to firm, sources told Prospect News.

"Volume looks pretty good," a source said. "Decent flow."

Overall Trace volume jumped 55% to about $16 billion on Tuesday, one source reported.

Meanwhile, the CDX Series 13 North American high-grade index was wider by 1 basis point at a mid bid-asked spread level of 90 bps, according to a source.

"Although IG 13 is wider, it seemed like spreads were a bit tighter today," one source said.

Elsewhere, Treasuries were mixed for a second day. The yield on the 10-year Treasury note was unchanged at 3.61%, while the yield on the 30-year Treasury bond eased 1 bp to 4.57%, according to a source.

In secondary trading, the new notes from Public Service Electric & Gas were slightly tighter. Also in trading, paper from Republic Services Inc., U.S. Bancorp and Goldman Sachs Group, Inc. firmed, sources said.

Dexia Credit Local sells $4 billion

Dexia Credit Local sold $4 billion of bonds (Aa1/AA+/AA+) late in the day in two tranches, an informed source said.

The $1.75 billion of three-year floating-rate notes priced at par to yield Libor plus 40 bps.

A $2.25 billion tranche of 2% three-year notes priced at a spread of Treasuries plus 71.25 bps.

Bank of America Merrill Lynch, Citigroup Global Markets, Credit Suisse Securities and RBS Securities ran the books.

The sale "went really well," according to a source who worked on it. "Demand was strong for it."

The issuer sold a similar deal of $4 billion of bonds in two tranches on June 16, 2009.

The regional bank, focusing on sustainable development, is based in Brussels.

IG sales remain strong

Bond offerings in the high-grade market were heavily weighted toward sovereign and international issuers as they look to shore up finances and pay off maturing debt, sources said.

"I think some of them always issue about this time," a syndicate source who worked on the Dexia deal said. "They have a lot of financing to do."

Investors tend to snap up the bonds as they are mostly triple-A rated.

"There's always solid demand," the source said.

Another of these issues is expected to price on Wednesday, with the Bank of England offering some short bonds. Price talk was not available at press time as the deal is being priced out of London, a source at one of the bookrunners said.

New bonds - whether corporate, financial or sovereign - have been largely oversubscribed in recent days. Sales on Monday from Goldman Sachs, Republic Services and U.S. Bancorp were each at least two times oversubscribed on the books.

"People love good-quality paper," the syndicate source said.

OeKB sells guaranteed notes

Austria's OeKB priced $1.25 billion of 1.75% three-year global guaranteed notes (Aaa/AAA) early in the day to yield 44.25 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

Goldman, Sachs & Co., J.P. Morgan Securities and UBS Investment Bank ran the books.

The sale is guaranteed by the Republic of Austria

The export and financial services company for Austrian businesses is based in Vienna.

PSE&G offers small deal

Public Service Electric & Gas priced $300 million of 5.5% 30-year secured medium-term notes (A2/A-A) by mid-afternoon to yield Treasuries plus 95 bps, a source away from the sale said.

Bookrunners were BNP Paribas Securities, JPMorgan and RBS Securities.

Proceeds will be added to the company's general funds and used for general corporate purposes including funding the repayment at maturity of $300 million in floating-rate notes due on March 12, 2010.

The utility company is based in Newark.

Bank of England plans short bond sale

The Bank of England announced a sale of three-year notes (Aaa/AAA/AAA), with pricing expected on Wednesday, a market source said.

They are being priced under Rule 144A.

It's likely the deal went overnight to capitalize on investors in Europe and Asia, the source said. The bank last issued in March of 2009, he added.

"There should be decent demand," he said, citing the infrequency of the bank's issues.

Barclays Capital, BNP Paribas Securities, Goldman Sachs and JPMorgan ran the books.

Proceeds are being used to finance foreign-exchange reserves.

The central bank for the United Kingdom is based in London.

PSE&G firmer

The new 30-year bonds from Public Service Electric & Gas firmed in the secondary markets, sources said.

By afternoon trading, the bonds were being quoted at 94 bps bid, 92 bps offered, one trader said.

The bonds were seen closing at 94 bps bid, 91 bps offered, according to a source.

The bonds "had been offered at 87 in the gray market," the source said.

Republic Services tighter again

Republic Services' new notes from Monday's primary activity continued to firm in the secondary on Tuesday, according to traders.

The Phoenix-based waste management company priced $1.5 billion of notes in two tranches on Monday.

The notes due 2020 priced at Treasuries plus 140 bps and later that day had tightened to 137 bps bid, 134 bps offered.

Late Tuesday, the 10-year notes were seen firming to 138 bps bid, 134 bps offered, according to a trader.

Meanwhile, one source saw the 10-year notes earlier Tuesday at 137 bps bid, 132 bps offered and firming even more.

"Last today" the notes were at 131 bps, the source said.

Also, the bonds due 2040 that Republic Services priced at Treasuries plus 165 bps were seen continuing to firm.

The bonds were quoted earlier Tuesday at 160 bps bid, 158 bps offered after ending the previous day at 160 bps bid, 157 bps offered, a trader said.

But the 30-year bonds continued to tighten from one morning quote at 160 bps bid, 155 bps offered to end the day at 155 bps, according to the trader.

Goldman firms

Elsewhere in the secondary, Goldman Sachs' new 5.375% notes due 2020 firmed slightly on Tuesday, a source said.

"Not much change from yesterday - about 2 bps tighter," the source said.

The notes were quoted at 187 bps offered.

Goldman Sachs priced $2 billion of the 10-year notes at Treasuries plus 190 bps on Monday. The same day, one trader saw the notes at 190 bps bid, 189 bps offered in the secondary market.

The financial services company is based in New York.

U.S. Bancorp tightens

Also in secondary trading on Tuesday, the new notes from U.S. Bancorp firmed nearly 10 bps in trading from the previous day, a source said.

U.S. Bancorp sold $500 million of 3.15% notes due 2015 at 90 bps over Treasuries on Monday, and later in the day, the notes firmed to 85 bps bid, 82 bps offered.

Activity continued into Tuesday, with the five-year notes seen "earlier" at 84 bps bid, 81 bps offered.

Rounding out the day, the notes firmed late to 82 bps bid, 80 bps offered, the source said.

U.S. Bancorp is a Minneapolis-based financial holding company.

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