Omnicom upsizes; British Columbia, Municipality Finance price sovereigns; CenturyLink widens

By Andrea Heisinger and Cristal Cody

New York, April 18 - The corporate space in the high-grade primary market was quiet Wednesday. Omnicom Group Inc. was the single corporate deal, and the rest of the deals came from sovereign issuers.

Omnicom priced $750 million of 10-year notes a day after reporting first-quarter earnings that beat analyst estimates. This was the marketing and communications company's first bond deal since 2010.

The Province of British Columbia sold $1.5 billion of bonds in two parts. There was also a $1 billion offering of five-year notes from Finland's Municipality Finance plc.

The day was uneventful save for more first-quarter earnings announcements.

"Kind of dull out there," a syndicate source said. "Not much for corporates. There were a couple in the EM space."

It's possible there will be more sovereign deals in the remainder of the week, but corporate deals are expected to be scarce.

"I know we have nothing scheduled for tomorrow," a second syndicate source said. "I'm not hearing of anything away."

Omnicom's new notes traded flat in the secondary market in the late afternoon.

The Markit CDX Series 18 North American Investment Grade index was unchanged on the day at a spread of 99 basis points.

"It's been weaker all day," a trader said. "Probably going into the close it came off a little on the lows."

Bonds in the cable and telecom sector opened the day 3 basis points to 10 bps wider but came in to trade going out 2 bps to 5 bps wider, a trader said.

CenturyLink, Inc.'s split-rated notes continue to be the "biggest underperformer," a trader said.

Bank and financial paper eased 5 bps to 10 bps in trading, led by Morgan Stanley.

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

Among banks, Bank of America's CDS costs eased 5 bps to 265 bps bid, 275 bps offered. Citi's CDS costs rose 5 bps to 239 bps bid, 244 bps offered.

Among brokers, Merrill Lynch's CDS costs eased 5 bps to 282 bps bid, 292 bps offered. Morgan Stanley's CDS costs widened 7 bps to 365 bps bid, 370 bps offered. Goldman Sachs' CDS costs traded 5 bps wider at 269 bps bid, 274 bps offered.

Treasuries traded better on Wednesday ahead of Spanish bond auctions. The benchmark 10-year Treasury note yield fell 2 bps to 1.97%. The 30-year bond yield closed 2 bps lower at 3.12%.

Omnicom upsizes

Omnicom Group, along with Omnicom Capital Inc. and Omnicom Finance Inc. as guarantors, priced an upsized $750 million of 3.625% 10-year senior notes (Baa1/BBB+/A-) to yield Treasuries plus 170 bps, an informed source said.

The size of the trade was increased from $500 million, the source said. The paper was sold tighter than whispered guidance in the 180 bps area.

Demand for the trade was about $3 billion, and the increase in its size was due to this.

"The company decided we could take it out, and we went with it," the source said of the upsizing.

The active bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes including working capital, fixed asset expenditures, acquisitions, debt refinancing, common stock repurchase and capital transactions.

The company's notes traded flat at 170 bps bid, 167 bps offered in the secondary market, a trader said.

Omnicom was last in the market with a $1 billion issue of 4.45% 10-year notes priced at 155 bps over Treasuries on Aug. 2, 2010.

The holding company for marketing and corporate communication is based in New York.

B.C.'s $1.5 billion

The Province of British Columbia sold $1.5 billion of bonds (Aaa/AAA/AAA) in two parts, a market source said.

There was a tranche of $1.25 billion 1.2% five-year notes priced at a spread of mid-swaps plus 8 bps.

The province also reopened its issue of 2.65% notes due September 2021 to add $250 million. These reopened notes priced at a spread of mid-swaps plus 28 bps, or Treasuries plus 31 bps.

Total issuance is $1 billion including $750 million priced on Sept. 15, 2011 at mid-swaps plus 40 bps, or Treasuries plus 57.95 bps.

CIBC World Markets Corp., HSBC Securities (USA) Inc., RBC Capital Markets LLC and Scotia Capital (USA) Inc. were the bookrunners.

Proceeds are being added to the Consolidated Revenue Fund of British Columbia.

The province's capital is Victoria.

Municipality Finance prices

Finland's Municipality Finance sold $1 billion of 1.625% five-year notes (Aaa/AAA/) to yield mid-swaps plus 55 bps, an informed source said.

Barclays Capital Inc., Daiwa Securities America Inc., Deutsche Bank Securities Inc. and JPMorgan ran the books.

The credit institution for the municipal sector and state-subsidized housing is based in Helsinki.

IBRD gives terms

The International Bank for Reconstruction and Development, a part of the World Bank, priced $750 million of 0.55% two-year notes (Aaa/AAA/) at par, according to a press release.

Deutsche Bank Securities and TD Securities (USA) LLC were the bookrunners for the sale to institutional investors.

The issuer is based in Washington, D.C.

CenturyLink bonds wider

CenturyLink's 5.8% senior notes due 2022 (Baa3/BB/BBB-) opened the day 10 bps wider at 400 bps bid, 390 bps offered and traded going out at 395 bps bid, 385 bps offered, 5 bps weaker on the day, according to a trader.

CenturyLink sold $1.4 billion of the notes at a spread of Treasuries plus 380 bps on March 5.

The broadband and telecommunications company is based in Monroe, La.

Morgan Stanley widens

Morgan Stanley's 5.5% notes due 2021 widened 10 bps to 418 bps bid, 408 bps offered, a trader said on Wednesday.

Morgan Stanley sold $1 billion of the notes (A2/A/A) on Oct. 27 at a spread of 335 bps over Treasuries.

The investment bank is based in New York.

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