UBS sells hybrid preferreds; coming week's calendar less busy; bank, broker CDS mostly lower

By Aleesia Forni and Andrea Heisinger

New York, Aug. 10 - Issuers in the investment-grade bond market mostly took Friday off after a hectic week, when more than $22.5 billion of new paper was priced, according to Prospect News data.

UBS AG sold $2 billion of $1,000-par hybrid bonds in the preferred stock market. There was in the ballpark of $9 billion on the books for the trade, a source in the high-grade market said.

Volume is set to decline slightly in the coming week with between $10 billion and $15 billion on the calendar, sources said.

"It should be busy," said one market source late in the day. "We have three deals for Monday, and hearing more [...] could have six deals that day."

Most of these are "smaller size," the source added.

There is also chatter about a large trade of $4 billion or more, but it's not a certainty, sources said.

A syndicate source said that the week is expected to be front-loaded and "we're not going to see $20 billion or more like this week. It's starting to slow down a bit."

Thursday's issuances from Hospitality Properties Trust and Paccar Financial Corp. were tighter on Friday during a "quiet day" that one trader said got "quieter by the minute."

Meanwhile, investment-grade bank and brokerage credit default swaps costs were mostly lower on Friday, according to a market source.

Bank of America's CDS costs tightened 3 bps to 230 bps bid, 240 bps offered. Citi's CDS costs also declined 3 bps to 227 bps bid, 237 bps offered. J.P. Morgan's CDS costs were 1 bps tighter at 117 bps bid, 122 bps offered.

Merrill Lynch's CDS costs firmed 3 bps to 247 bps bid, 257 bps offered. Morgan Stanley's CDS costs were also 3 bps tighter at 327 bps bid, 337 bps offered. Goldman Sachs' CDS costs widened 3 bps to 255 bps bid, 265 bps offered.

UBS's preferreds

UBS is issuing $2 billion of 7.625% $1,000-par 10-year subordinated hybrid capital bonds (/BBB-/BBB-), a market source told Prospect News.

Talk was originally around 8%, the source said.

Around mid-afternoon, the source saw a high of 102 before the notes "eased off" to 101 5/8, "which is still very good."

At the end of the day, the source said the issue "kind of bounced around" in a 101.25 to 102 range, ending at 101.625 bid, 101.875 offered.

"That's very good," he said.

Chatter was that book orders hit as much as $9 billion. The source said that it depended on whom you asked.

"Some said $8.4 [billion], some said $9 [billion]." Either way, "it was up there," he said.

UBS Securities LLC was lead arranger. Joint bookrunners were Barclays PLC, Citigroup Global Markets Inc., Goldman Sachs Group Inc., JPMorgan Securities LLC, Morgan Stanley & Co. Inc., RBS Securities Inc. and Wells Fargo Securities LLC.

UBS is a Zurich-based bank.

Hospitality Properties firms

The recent 10-year issuance from Hospitality Properties Trust was seen at 347 bps offered during Friday's session.

The company priced $500 million of 5% 10-year senior notes (Baa2/BBB/) at a spread of Treasuries plus 355 bps on Thursday.

Hospitality Properties is based in Newton, Mass.

Paccar three-year notes

Also in the secondary market, Paccar Financial's $300 million issue of 0.75% three-year medium-term notes were quoted at 32 bps offered, a trader said.

The notes priced at Treasuries plus 40 bps on Thursday.

The provider of retail and commercial truck financing for Paccar Inc. is based in Bellevue, Wash.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.