Time Warner Cable, Omnicom, Enogex price deals early; spreads tighter, Merck bonds firmer

By Andrea Heisinger and Paul Deckelman

New York, June 24 - All of the three offerings Wednesday were priced by mid-afternoon. They came from Time Warner Cable Inc., Omnicom Group Inc. and Enogex LLC.

This rush was likely to get pricing done before the conclusion of a five-year Treasury note auction and the end of a Federal Reserve Board Federal Open Market Committee meeting, a market source said.

"That was certainly the case with our deal [Enogex]," he said.

Otherwise, the market's tone wasn't half bad, another source said.

In the secondary arena on Wednesday, a market source said the CDX Series 12 North American high-grade index narrowed by 4 basis points to a mid bid-asked spread level of 141 bps.

Advancing issues - which on Tuesday had held a nine-to-seven edge over decliners - fell narrowly behind them on Wednesday.

Overall market activity, reflected in dollar eased about 3% from Tuesday's levels.

Spreads in general were seen tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year issue rose by 6 bps to 3.68%.

The new Merck & Co. long bonds that came to market earlier in the week were the most heavily traded high grade issue on Wednesday, firming marginally from prior levels and in solidly from the level where the bonds had priced.

Time Warner Cable offers $1.5 billion

Time Warner Cable sold $1.5 billion of 6.75% 30-year debentures at Treasuries plus 260 bps.

Guidance was for a spread in the 265 bps area, a source said, and it came at the tight end of that.

Bookrunners were Banc of America Securities, Barclays Capital, BNP Paribas Securities, Citigroup Global Markets, J.P. Morgan Securities and Mitsubishi UFJ Securities.

Proceeds will be used to repay a portion of existing bank credit facilities.

The notes are guaranteed by Time Warner NY Cable Holding Inc. and Time Warner Entertainment Co. LP.

The cable television operator is based in New York City.

Before the books closed, a source away from the sale said the deal wasn't being sold as swiftly as other recent issues from conspicuous names.

It was "the big deal of the day, even though it wasn't that big," a syndicate source said.

Enogex prices small deal

Midstream pipeline Enogex sold an upsized $200 million of 6.875% five-year senior notes at Treasuries plus 425 bps, an informed source said.

The size was initially $150 million.

Bookrunners for Rule 144A deal were J.P. Morgan Securities, UBS Investment Bank and Wachovia Capital Markets.

Proceeds will be used to buy back senior notes due 2010.

The subsidiary of OGE Energy Inc. is based in Oklahoma City.

The sale was announced in a press release Wednesday morning that also told of a tender offer for $150 million of the company's 8.125% senior notes due 2010.

There was a fair amount of interest for the transaction, despite it not being from a household name, a source close to the deal said.

"The company decided if the demand was there and it came at the right level, they'd upsize," he said. "They were happy with the outcome," he added, referring to the level at which it priced.

The bonds were about 1.5 times oversubscribed, he said, despite the fact that it was "tough to find buyers." He cited the Rule 144A status, as well as it not being from a common name as the reasons for this.

Omnicom sells 10-year

Omnicom Group priced $500 million 6.25% 10-year senior notes at Treasuries plus 275 bps.

Bookrunner was J.P. Morgan Securities, with Barclays Capital, Citigroup Global Markets and Deutsche Bank Securities as passive books.

Proceeds are going to repay debt under a $2.5 billion revolving credit facility and for general corporate purposes including working capital expenditures, acquisitions, refinancing of debt or other capital transactions.

The global marketing and corporate communications company is based in New York City.

Deals done quickly

All of Wednesday's issues got done early - even the $1.5 billion sale from Time Warner.

This was not a coincidence, a syndicate source said.

"There was the five-year [Treasury note] auction," he said, "and they wanted to get done before the FOMC [meeting] was done."

"They wanted to get in and get out."

The rush didn't much matter in the end, a source said, as "nothing big" came out of either of these.

"It was an early day, but there were a few deals," he said.

The remainder of the week will likely be quiet, as syndicate sources said their desks and those away from them were bare of issuance for Thursday or Friday.

"That's the case here," one source said. "It's not always going to be the case, but it's the current trend."

Vepco hangs around issue

A trader saw Virginia Electric & Power Co.'s new 5% notes due 2019 at a spread over comparable Treasury issues of 136 bps bid, 132 bps offered. The Richmond, Va.-based utility operator had priced its $350 million of bonds on Tuesday at a spread of 137.5 bps.

The trader also saw "mostly reverse inquiry " dominating trading of such other new utility paper as Rochester Gas & Electric Corp.'s $150 million of 5.90% 10-year first mortgage bonds, which priced earlier in the session at 225 bps over, and Gulf Power Co., making it difficult to get a handle on where the companies' bonds were trading. Gulf, a Pensacola, Fla.-based subordinate of Southern Co., had priced $140 million of floating-rate notes due 2010 bonds over two sessions -- the original $125 million on Monday and another $15 million as an add-on Tuesday.

Merck moves around

Among the recently priced issues, a trader saw Merck & Co.'s 5.85% bonds due 2039 as the most actively traded high-grade issue on the day, with turnover topping $60 million. He quoted the bonds at 134 bps bid, in slightly from the 137 bps bid, 132 bps offered level at which those bonds had traded on Tuesday, and in further still from the 145 bps level at which the New York-based pharmaceutical company priced its $750 million of the long bonds on Monday, as part of four-part, $4.25 billion mega-deal.

Dell widens out

Also among the recent deals, Dell Inc.'s 5.875% notes due 2019 were seen trading at 201 bps over. The Round Rock, Tex.-based computer manufacturer had priced that $600 million of bonds at 195 bps over, as part of a two-tranche, $1 billion deal on June 10.

Pipeline op's bonds still popping

On the other hand, Magellan Midstream Partners LP'S 6.55% notes due 2019 continued to trade considerably tighter than their recent pricing levels, tightening to 252 bps on Wednesday. That was in by 5 bps on the session - and well inside the 280 bps level at which the Houston-based pipeline operator's $300 million of new bonds priced last Friday.

Financials seen mixed

The financial sector meantime was seen quiet, with no new deals pricing, and quiet as investors digested the latest policy message from the Federal Reserve.

A trader called it "a weird day - some stuff was a little better, but the trend was a little wider, 5 bps to 10 bps wider."

Overall, though, he said that "it was very mixed, I'd say."

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