Barclays, Interstate Power, Wisconsin Power, Kexim offer bonds; Interstate, Wisconsin gain

By Andrea Heisinger and Paul Deckelman

New York, July 7 - The pace picked up slightly Tuesday in the investment-grade market after a lackluster start to the week, with deals from Barclays Bank plc, Interstate Power & Light Co., Wisconsin Power & Light Co. and Export-Import Bank of Korea.

Both of the utility names and Barclays were all significantly oversubscribed, sources close to them said. The remainder of the week is set to stay quiet as issuers remain in earnings blackouts.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 12 North American high-grade index widened by 3 basis points to a mid bid-asked spread level of 143 bps.

Advancing issues - which on Monday had led decliners for a seventh consecutive session - continued to stay ahead of the decliners on Tuesday, by a slightly less than three-to-two margin.

Overall market activity, reflected in dollar-volume totals, rose some 45% from Monday's restrained post-holiday levels.

Spreads in general were seen generally wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year government note declined Tuesday by 10 bps to 3.45%.

The new Wisconsin Power & Light bonds, and the new Interstate Power & Light issue, were each seen having firmed from the spread over comparable Treasury issues at which those bonds had priced earlier in the session.

Among the financial issues, the new Barclays Bank notes were solidly tighter after pricing.

Barclays offers $2.5 billion

Barclays Bank sold $2.5 billion of 5.2% five-year global notes at Treasuries plus 287.5 bps.

Barclays Capital ran the books.

The financial services company is based in London.

The deal priced in line with talk for a spread in the 287.5 bps area, an informed source said.

It went "exceptionally well," he said, adding that it was "significantly oversubscribed." He declined to say how many times.

The offering was not guaranteed by the government of the United Kingdom as previous ones have been, he said.

Utilities sell small deals

Both Interstate Power & Light and Wisconsin Power & Light priced bonds Tuesday, although only one of them was upsized.

Interstate Power increased its offering from $250 million to $300 million of 6.25% 30-year senior debentures priced at Treasuries plus 195 bps.

Proceeds are going to repay short-term debt, be invested in short-term assets and then to redeem $135 million in long-term debt and to fund capital expenditures.

Banc of America Securities and Wells Fargo Securities ran the books for the electric and natural gas provider based in Cedar Rapids, Iowa.

Wisconsin Power sold $250 million of 5% 10-year debentures at 160 bps over Treasuries. Proceeds from this deal are going to repay short-term debt and invested in short-term assets and to fund capital expenditures.

Banc of America Securities and Wells Fargo were also bookrunners for this sale.

The electric and natural gas company is based in Madison, Wis.

Both sales came in line with guidance, a source close to them said. They were "well oversubscribed," he said. The Wisconsin Power deal was about eight times oversubscribed, while the Interstate Power came in at four times over.

Deal drought to continue

As earnings season moves forward issuance will remain quiet, sources said on a Tuesday that may see the most, and largest, issues for the week.

"I think all of the deals went well," a market source said. "There's just not much out there."

A second market source said the tone was good for the day and allowed all of the deals that got done to be nicely oversubscribed.

"We have earnings so it will be quiet the next couple of weeks," he said.

The remainder of the week has no set offerings, but it is expected there will be at least a couple for the next two days.

"It's looking very quiet," a syndicate source said of his desk's calendar.

Kexim prices $1.5 billion

The Export-Import Bank of Korea sold $1.5 billion 5.875% bonds due 2015 at Treasuries plus 362.5 bps, a market source said.

Books were run by Barclays Capital, Credit Suisse Securities, Deutsche Bank Securities, Merrill Lynch & Co. and Morgan Stanley & Co. Inc.

Power names pop up

When the new Wisconsin Power & Light 5% notes due 2019 were freed for secondary dealings, a trader saw those bonds having firmed to 150 bps bid, 149 bps offered, from the 160 bps over level at which the company - a unit of Madison, Wis.-based electric and gas utility company Alliant Energy Corp. - had priced its $250 million of bonds earlier in the session.

He also saw Wisconsin P&L's corporate cousin, Interstate Power & Light - also an Alliant unit - likewise a bit firmer. Its 6.25% bonds due 2039 tightened to 186 bps bid, 182 bps offered, in from the 195 bps over level at which the company had priced its $300 million issue of paper - upsized from the originally shopped $250 million -- earlier in the day.

Oracle five-years firmer

A market source saw Oracle Corp.'s recently priced 3.75% notes due 2014 as the most actively traded high-grade bond on the day, with over $60 million having changed hands as of mid-afternoon.

The Redwood Shores, Calif.-based software maker's five-years were seen by a trader to have firmed to 105 bps bid -- well in from the 120 bps over level at which the company had priced its $1.5 billion of bonds on June 30 as part of a $4.5 billion three-part mega-deal.

The trader saw Oracle's $1.75 billion of 5% notes due 2019 just a little tighter at 152 bps bid, 148 bps offered, versus their 155 bps pricing level.

And he saw its $1.25 billion of 6.125% bonds due 2039 at 180 bps bid, 175 bps offered, in from the 185 bps level at which they had priced.

Barclays Bank bonds better

In the financial realm, a trader said that the new Barclays Bank 5.20% notes due 2014 had tightened to 276 bps bid, 274 bps offered, well in from the 287.5 bps spread at which the big U.K.-based bank had priced its $2.5 billion offering earlier in the day.

Generally, he said, his sector was seeing "more [activity] than in the last two or three business days, which figures. We definitely did more."

He said the market tone was "okay -- not great, but the tone is okay."

Apart from the new Barclays deal, he said, there was "not really" anything else standing out.

"We feel very sideways, and I think we're going to be that way for a little while - through earnings, we're going to be trading sideways."

Bank, brokerage CDS tighten up

A trader who watches the credit-default swaps market said that the cost of insuring a holder of bonds from a major bank, or one of the big investment banking names, against a possible event of default, was unchanged to 5 bps tighter across the board, "which surprises me," he continued, noting the steep fall stocks took - the bellwether Dow Jones Industrial Average slid by over 161 points, or 1.94%, while broader market indexes were also lower.

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