Orange, Verizon bring new deals; Orange notes firm; bond spreads tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, Jan. 30 - Two new deals priced during a "volatile session" for the high-grade market on Thursday, including Orange SA's new $1.6 billion sale of notes in two tranches.

The company came to market with $750 million of 2.75% five-year notes, which sold at Treasuries plus 125 basis points, a source said.

There was also $850 million of 5.5% 30-year notes priced at 187.5 bps over Treasuries.

Meanwhile, Verizon Communications Inc. priced an upsized $500 million of 5.9% notes due 2054 at par on Thursday.

High-grade supply for the week currently totals roughly $11.4 billion, falling short of earlier estimates of a $15 billion to $20 billion week.

"Don't think we'll see anything tomorrow," a source said of any new issue activity on Friday.

Investment-grade bonds reversed course over the day and headed out stronger on the light primary activity, market sources said.

The Markit CDX North American Investment Grade series 21 index firmed 2 bps to a spread of 71 bps.

In the secondary market, Orange's new 2.75% notes due 2019 tightened 9 bps, while the tranche of 5.5% bonds due 2044 traded more than 12 bps better, a trader said.

Orange two-parter

Orange priced a $1.6 billion two-part issue of notes (Baa1/BBB+/), according to an informed source and two separate FWP filings with the Securities and Exchange Commission.

The sale included $750 million of 2.75% five-year notes priced with a spread of Treasuries plus 125 bps, or 99.916 to yield 2.768%.

A second tranche was $850 million of 5.5% notes due 2044 sold at 187.5 bps over Treasuries.

Pricing was at 99.621 to yield 5.526%.

Orange's 2.75% notes due 2019 tightened to 116 bps bid, 113 bps offered in the secondary market, a trader said.

The tranche of 5.5% bonds due 2044 firmed in aftermarket trading to 175 bps bid, 172 bps offered.

BofA Merrill Lynch, Deutsche Bank Securities Inc., RBS Securities Inc., Mitsubishi UFJ Securities (USA) Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used to repay the company's 4.375% notes due July 8, 2014, with any remaining proceeds to be used for general corporate purposes.

Orange is a Paris-based telecommunications company.

Verizon $25-par notes

Verizon Communications sold an upsized $500 million of 5.9% 40-year notes (Baa1/BBB+/A-) at par on Thursday, a market source said.

The $25-par notes were talked at a yield of 6% to 6.125% and had initially been expected to total $250 million.

The notes are callable at par in 2019.

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners for the Securities and Exchange Commission-registered deal.

The issuer is a New York City-based telecommunications company.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices fell, according to a market source.

Bank of America Corp.'s CDS costs firmed 4 bps to 88 bps bid, 91 bps offered. Citigroup Inc.'s CDS costs tightened 4 bps to 92 bps bid, 95 bps offered. JPMorgan Chase & Co.'s CDS costs fell 3 bps to 72 bps bid, 75 bps offered. Wells Fargo & Co.'s CDS costs firmed 2 bps to 43 bps bid, 48 bps offered.

Merrill Lynch's CDS costs tightened 4 bps to 90 bps bid, 94 bps offered. Morgan Stanley's CDS costs firmed 6 bps to 97 bps bid, 100 bps offered. Goldman Sachs Group, Inc.'s CDS fell 3 bps to 98 bps bid, 103 bps offered.

Christine Van Dusen and Paul Deckelman contributed to this review.

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