Sovereigns take over as Sweden, OeKB price; Tupperware, Markel widen; HP, Caterpillar firm

By Andrea Heisinger and Cristal Cody

New York, May 26 - The Kingdom of Sweden gave details of its second dollar-bond sale of the year on Thursday, and Oesterreichische Kontrollbank AG also sold bonds as other issuers held back until after the long weekend.

Sweden sold $1.5 billion of three-year bonds with the books oversubscribed.

OeKB priced $1.25 billion of five-year global notes guaranteed by the Republic of Austria.

There was a split-rated sale of preferred stock from CommonWealth REIT totaling $250 million. The deal was upsized from $150 million.

The day was "unchanged," a source said, after a somewhat downbeat Wednesday, although they added that the tone "wasn't any worse."

"At this point everyone's waiting," he said, referring to companies not pricing deals until after Memorial Day weekend.

"Tomorrow's a non-event," he said. "There could be something, but it's going to come early."

After corporate issuance poured into the market on Tuesday and Wednesday, the primary needed a breather, another source said.

Overall investment-grade Trace volume dropped as traders prepared to head out for the holiday weekend. Volume fell 15% to about $11 billion, a market source said.

Tupperware Brands Corp.'s new notes widened 10 basis points on the bid side in trading, according to a source.

Markel Corp.'s new 10-year notes also widened 3 bps on the bid side in trading.

In new deals trading stronger, the megadeals from Hewlett-Packard Co. and Cameron International Corp. both firmed, sources said.

Caterpillar Inc.'s new short-term bonds also stayed tighter in trading.

The Markit CDX Series 14 North American investment-grade index firmed 1 basis point to a spread of 90 bps, Markit Group Ltd. said.

Treasuries rallied after a strong auction of seven-year notes surprised the market. The benchmark 10-year Treasury note yield dropped to 3.06% from 3.13% and the 30-year bond yield fell 6 bps to 4.22%.

Sweden prices $1.5 billion

The Kingdom of Sweden sold $1.5 billion of 1% three-year bonds at a spread of mid-swaps minus 10 bps, according to a press release.

It was the second dollar bond of the year for the issuer, and there was about $2.3 billion of demand from investors, according to the release.

Lead managers said in the release that central bank and official institutions bought almost 75% of the issue. As much as 28% was placed in the Americas. The balance was sold to Europe, the Middle East and Asia.

The bonds were sold in the Rule 144A market.

Bookrunners were Deutsche Bank Securities Inc. and RBS Securities Inc.

Proceeds are being used to refinance dollar bonds in foreign currency that was lent to the Riksbank.

The issuer is based in Stockholm.

OeKB's guaranteed notes

Oesterreichische Kontrollbank sold $1.25 billion of 2% five-year global notes to yield Treasuries plus 33.05 bps, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aaa/AAA) are guaranteed by the Republic of Austria.

Bookrunners were Barclays Bank PLC, HSBC Bank plc and J.P. Morgan Securities Ltd.

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

HP gives deal terms

Hewlett-Packard sold $5 billion of global notes (A2/A/A+) in five tranches late on Wednesday, according to a market source away from the deal and FWPs with the SEC.

There were initially six parts, a source said, but the company opted not to sell a tranche of two-year fixed-rate notes.

The $1.75 billion of two-year floating-rate notes was priced at par to yield Libor plus 28 bps. It sold at the low end of talk in the Libor plus 30 bps area.

There was also a $500 million tranche of three-year floaters priced at par to yield Libor plus 40 bps. It sold at the tight end of guidance in the Libor plus 42 bps area.

A $500 million tranche of 1.55% three-year notes sold at a spread of Treasuries plus 68 bps. This was tight to talk in the 70 bps area.

The $1 billion of 2.65% five-year notes priced at 90 bps over Treasuries, which was in line with guidance.

A tranche of $1.25 billion of 4.3% 10-year notes priced at a spread of 120 bps over Treasuries. This sold directly in line with talk.

Bookrunners were Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds are being used to repay $1 billion of 2.25% global notes due in May along with $750 million of floaters due in May and also for general corporate purposes including repayment of commercial paper.

This was the largest bond sale from Hewlett-Packard. The company last sold bonds in a $2 billion deal in two parts on Nov. 29, 2010. The 2.25% five-year notes from that deal priced at 73 bps over Treasuries and the 3.25% 10-year notes priced at 95 bps over Treasuries.

The information technology company is based in Palo Alto, Calif.

Commonwealth's preferreds

CommonWealth REIT sold $250 million of 7.25% series E cumulative redeemable perpetual preferred stock, according to a market source.

The market had originally been expecting a $150 million deal at 7.5% to 7.625%.

The preferreds (Baa3/BB+) have a liquidation preference of $25 per share.

Merrill Lynch, Pierce, Fenner & Smith Inc., Citigroup Capital Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to pay down the real estate investment trust's revolving credit facility and for general business purposes, including future acquisitions.

CommonWealth REIT is based in Newton, Mass.

Caterpillar strong

Caterpillar's senior bonds (A2/A/A) sold on Tuesday continued to stay tighter in the secondary market, traders said on Thursday.

The company's 1.375% three-year notes, priced at a spread of Treasuries plus 50 bps, traded at 44 bps.

The tranche of 3.9% notes due 2021 firmed 2 bps to 83 bps bid, 81 bps offered. The notes priced at 85 bps over Treasuries.

The 5.2% bonds due 2041 also tightened to 94 bps bid, 90 bps offered from the issue price at Treasuries plus 98 bps.

The heavy machinery maker is based in Peoria, Ill.

Cameron firms

Cameron International's 10-year and 30-year bonds tightened in secondary trading, according to sources.

The company sold the senior notes (Baa1/BBB+) on Wednesday.

The $250 million of 4.5% notes due 2021 were sold at a spread of Treasuries plus 148 bps. The notes firmed to 143 bps bid, 140 bps offered.

A $250 million tranche of 5.95% bonds due 2041 was sold at a 168 bps over Treasuries spread. The notes traded early in the day at 160 bps bid, 157 bps offered, one trader said.

Late afternoon, the bonds firmed to 152 bps bid, 145 bps offered, another trader said.

The oil and gas pressure control and compression company is based in Houston.

HP tighter

Hewlett-Packard's notes traded Thursday stronger, according to traders.

A $500 million tranche of three-year notes sold at a spread of Treasuries plus 68 bps. The notes tightened to 63 bps bid, 61 bps offered.

The $1 billion tranche of five-year notes narrowed to 87 bps bid, 85 bps offered from the issue price of 90 bps over Treasuries.

The tranche of $1.25 billion in notes due 2021 priced at 120 bps over Treasuries and narrowed to 118 bps bid, 115 bps offered.

The information technology company is based in Palo Alto, Calif.

Tupperware widens

Tupperware Brands sold $400 million of 4.75% 10-year senior notes (Baa3/BBB-) to yield Treasuries plus 175 bps on Wednesday.

A trader saw the notes wider at 185 bps bid, 182 bps offered late Thursday in secondary trading.

The household goods company is based in Orlando, Fla.

Markel weaker

Markel's new notes also were weaker in next-day secondary trading. The company sold $250 million of 5.35% 10-year senior notes (Baa2/BBB/BBB) to yield Treasuries plus 225 bps on Wednesday.

In trading, a source saw the notes at 228 bps bid, 225 bps offered.

The diversified financial holding company is based in Glen Allen, Va.

Stephanie N. Rotondo contributed to this review

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