Issuance for week meets expectations; modest calendar ahead; trading muted as AT&T bonds firm

By Aleesia Forni and Andrea Heisinger

New York, Feb. 8 - The week's issuance met expectations, although Friday saw no new deals as euro zone worries returned and Treasury yields rose.

Some said there was also an eye on a winter storm that was approaching the East Coast.

"I think a lot of people are just bailing early today," one source said. "There's really not much happening anyway."

A syndicate source remarked that people from both the buy and sell side left early and that it had "left the market a little soft because of it."

The terms of a preferred stock sale from Armour Residential REIT Inc. were given.

Issuance is expected to be modest in the coming week as more corporate names emerge from earnings blackout and choose to tap the market, sources said.

The outlook is for $10 billion to $15 billion, with some syndicates leaning toward the wider end of that range.

"We have five to six financial trades [for the week] and only one over $1 billion," a source said, adding there were "only a couple of trades for Monday."

A market source called the coming week "modest" and said that there were at least five trades on the calendar for the first half. These are from all difference sectors, including some industrials.

"I would say most of them are going to be between $500 million to $750 million ballpark," the market source said. "It's not going to be a $40 billion week."

The secondary market was also muted Friday. The Markit CDX Series 18 North American Investment Grade index tightened 1 basis point to a spread of 89 bps.

AT&T Inc.'s bonds were slightly tighter. Another trader quoted the three-year bonds at 54 bps bid, 50 bps offered.

The $1 billion tranche of 0.9% notes sold at a spread of Treasuries plus 55 bps on Thursday.

The telecommunications company is based in Dallas.

Armour's preferreds

Armour Residential REIT priced $135 million of 7.875% series B cumulative redeemable preferred stock, the company said in an FWP filed with the Securities and Exchange Commission.

Pricing was at the low end of guidance given Thursday in the 8% area.

The issue was pegged at $24.50 bid, $24.55 offered on Friday.

"It seems like a dog to me," a trader said. "I can't believe they pressed the yield on that one."

Citigroup Global Markets Inc., UBS Securities LLC and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds will be used to acquire agency securities and for general corporate purposes.

Armour is a Vero Beach, Fla.-based real estate investment trust that invests in residential mortgage-backed securities.

Stephanie N. Rotondo contributed to this review

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