Cox Communications, Morgan Stanley sell bonds as issuance slows; spreads tighter, Cox gains

By Andrea Heisinger and Paul Deckelman

New York, Feb. 12 - Issuance slowed Thursday ahead of an early market close Friday and a long weekend, with a single-tranche deal from Cox Communications and a reopening of notes from Morgan Stanley about the only thing pricing.

A primary market source confirmed this, calling the day "boring" and saying "there was nothing going on."

In the secondary sphere on Thursday, a market source said the widely followed CDX Series 11 North American high-grade index was wider by 3 basis points on the day to a mid bid-asked spread level of 196 bps, versus 193 bps on Wednesday.

Advancing issues continued to lead decliners, by a not-quite five-to-four ratio.

Overall market activity, reflected in dollar volumes, was off by 20% from the levels seen on Wednesday; Thursday was the last full trading session of the week, ahead of Friday's abbreviated session and Monday's full close for the Presidents Day legal holiday.

Spreads in general tightened a little as Treasury yields rose; for instance, the yield on the benchmark 10-year note widened by 3 bps to 2.79%.

Cox Communications' new issue was seen to have tightened modestly from its spread over comparable Treasuries at its pricing.

Cox sells $1.25 billion

Cable TV, internet and phone service provider Cox Communications priced $1.25 billion of 8.375% 30-year notes at 99.613 to yield 8.410% with a spread of Treasuries plus 490 bps.

The deal was sold under Rule 144A.

Bookrunners were Barclays Capital Inc., J.P. Morgan Securities Inc., RBS Greenwich Capital and Wachovia Capital Markets.

There was nothing particularly notable about the deal, a source close to it said. It faced little competition, he added.

Morgan Stanley adds to FDIC deal

Morgan Stanley reopened an issue of 3.25% notes due 2011 backed by the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program to add $750 million.

The reopened notes priced at 103.44 plus accrued interest from Dec. 2, 2008.

This brings the issuance to $3.25 billion, including $2.5 billion issued Dec. 2.

Morgan Stanley ran the books.

Week reaches lull

In anticipation of a long weekend and early Friday market close, there was not much action in the high-grade primary Thursday, a source said.

"It was pretty slow out there today," he said. "I think everyone's just waiting for tomorrow when they can get out of here."

It's anticipated Friday will be slow, and possibly devoid of any new deals.

The remainder of the month should make up for the slowdown in issuance, he said, with a variety of companies tapping the debt market.

The source said he was hesitant to guess which names on a tentative calendar would price in the coming week.

"We just don't know at this point," he said. "A lot of things could change between now and then." He was referring to Tuesday of the coming week, when issuance is set to continue.

Coming deals will be from a variety of companies, a source said, and not boxed into financials, utilities or energy companies.

There are no large FDIC-backed offerings slated in the near future, but many of them price the day, or day after, they are announced, he said.

"Sometimes they go overnight, but in the recent ones it's kind of been a lot of reopenings," he said. "There hasn't been a lot of actually new deals."

Citigroup Inc. priced the last large new FDIC-backed offering at the end of January. It totaled $12 billion and was in multiple tranches.

Cox tightens, a little

A trader saw Cox Communications' new 8.375% bonds due 2039 trading at 485 bps bid, 480 bps offered; the company had priced its $1.25 billion of new bonds earlier in the session at 490 bps over.

Marathon mixed

Among the issues pricing earlier in the week, the trader saw fairly active dealings in Marathon Oil Corp.'s new bonds. The Houston-based energy company's 7.50% notes due 2019 were seen Thursday trading at a spread of 467 bps - that was out from 460 bps bid, 450 bps offered in initial aftermarket trading Wednesday, though still inside of the $700 million of bonds' spread at pricing of 487.5 bps.

The other half of that deal - the $800 million of 6.50% notes due 2014 - which had also priced at 487.5 bps over - was seen Thursday at 445 bps bid, 440 bps offered, in a little from 450 bps bid, 445 bps offered after the pricing on Wednesday.

Paccar trucks along

Paccar Inc.'s 6.875% notes due 2014 were trading at 442 bps over, the trader said -- in from the 455 bps at which they were trading on Wednesday and tighter still than the 500 bps over spread at which the Bellevue, Wash.-based truck manufacturer priced the $500 million of bonds Tuesday.

Paccar's $250 million of 6.375% notes due 2012, which also priced at 500 bps over on Tuesday, had likewise improved to 455 bps bid, versus Wednesday's 465 bps over.

News America notes hold gain

News America Inc.'s $700 million of 6.90% notes due 2019 , which priced on Tuesday at 410 bps over, and which on Wednesday had tightened a little to 405 bps bid, 404 bps offered, improved slightly on that, tightening to 403 bps bid, although the trader did not see an offered level.

He also did not see any activity in the other half of that deal, the $300 million of 7.85% bonds due 2039, which had priced on Tuesday at 437.5 bps.

McKesson moves up

McKesson Corp.'s two tranches of notes - its $350 million of 6.50% notes due 2014 and $350 million of 7.50% notes due 2019 - were seen having firmed solidly. Both were quoted Thursday at the 390 bps bid level; each of the tranches of the San Francisco-based healthcare company's bonds had priced Monday at 450 bps over.

Cisco struggles

While most of the new-deal paper has moved up, at least modestly in some cases, Cisco Systems Inc. has been the exception to the rule; the San Jose, Calif.-based networking and communications technology company's $2 billion of 4.95% notes due 2019, which priced Monday at 200 bps over, was stuck at 205 bps bid, 203 bps offered on Thursday.

The other half of that deal, the $2 billion of 5.90% bonds due 2039, had widened out to 245 bps bid, 240 bps offered, versus the Monday pricing level of 225 bps over.

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