British American Tobacco, Alabama Power, Southwestern Public Service lift issuance to $8.6 billion

By Andrea Heisinger

New York, Nov. 14 - A short week ended Friday with more issues from names including British American Tobacco plc, Alabama Power Co. and Southwestern Public Service Co.

More issues are expected in the coming week as companies try to cram deals in before the Thanksgiving holiday.

The secondary was quiet Friday, a source said, though trading was seen in some of the week's many issues.

British American Tobacco sells $1 billion

London-based British American Tobacco priced $1 billion in two tranches Friday afternoon.

A source close to the deal said he was not sure if reports of it being the company's first dollar-denominated deal were true.

He did say the company did not appear to have any outstanding dollar-denominated issues.

The $300 million of 8.125% five-year notes priced at 99.20 to yield 8.325%, or Treasuries plus 600 basis points.

The $700 million of 9.5% 10-year notes priced at 99.056 to yield 9.65%, or Treasuries plus 600 bps.

Books were run by Citigroup Global Markets Inc., Deutsche Bank Securities and J.P. Morgan Securities Inc.

Alabama Power does notes

Another subsidiary of Southern Co., Alabama Power, priced $250 million of 5.8% five-year senior notes at 99.856 to yield 5.834%, or Treasuries plus 355 bps.

The notes priced slightly tighter than talk, which was whispered at 360 bps, a source close to the deal said.

He said the bookrunners were going off Wednesday's issue from another Southern Co. subsidiary, Georgia Power Co.

The Georgia Power 6% five-year notes priced at 360 bps.

The source also noted that the company only wanted to do $250 million.

"It went pretty quickly," he said.

Bookrunners for the Alabama Power issue were BNY Mellon Capital Markets, Deutsche Bank and JPMorgan.

Southwestern Public Service prices

Southwestern Public Service priced $250 million of 8.75% 10-year senior notes Friday, making it another in a string of utilities doing deals in recent weeks.

The notes priced at 99.174 to yield 8.875% with a spread of Treasuries plus 515.5 bps.

JPMorgan ran the books.

Week of $8.6 billion ends

Issuance for the week totaled more than $8.6 billion, which was less than the $10.239 billion of the previous week.

This week's total was spread over a greater number of issuers while there were only three full days in which to price.

Among the larger issuers of the week, totaling more than $1 billion, were Philip Morris International Inc. with $1.25 billion, AT&T Inc. with $1.5 billion and Time Warner Cable Inc. with $2 billion.

All of the remaining, smaller issuers were utility names.

Coming week seen steady

If the three full days of trading were any indication of what's to come, the Nov. 17 week should see a steady stream of new issues, sources said Friday.

"It's kind of now or never," a source said. "That's what companies are thinking."

He was referring to the remaining issuance windows for the year, which are dwindling.

There is the coming week and the couple of days leading up to the Thanksgiving holiday. After that there are a couple of solid weeks to issue, and then the Christmas holiday followed by the New Year.

Many issuers still have deals to get done in 2008 and don't see market conditions improving any time soon.

"They kind of figure why not," a source said. "[New issue] concessions have kind of come down, so they're looking at the market."

It has been several months since any financial names have done issues, so any coming deals are likely to come from the utility and commercial sectors.

"We're seeing a lot of the same types of deals," a source said. "You'll see a lot of parent companies and then some subsidiaries.

"Hopefully they'll keep coming."

Alabama Power in slightly

The new Alabama Power 5.8% five-year notes were seen tightening slightly to 353 bps bid, 350 bps offered after pricing at 355 bps, a trader said.

Time Warner tighter

The two tranches of Thursday's Time Warner Cable bonds were seen tighter late Friday afternoon, a trader said.

The 8.25% notes due 2014 were at 571 bps bid, 566 bps offered, in from pricing at 590 bps.

The 8.75% notes due 2019 were quoted at 505 bps bid, 497 bps offered, in from 525 bps.

PG&E bonds mixed

Thursday's two-tranche offering from Pacific Gas and Electric Co. was seen mixed in the secondary, a trader said.

The 6.25% five-year notes were wider to unchanged at 412 bps bid, 408 bps offered in late afternoon trading. They priced at 410 bps.

The 8.25% 10-year notes that the company reopened were tighter at 375 bps bid, 365 bps offered from pricing at 395 bps.

GE bonds most traded

An issue from General Electric Capital Corp. was seen at the top of most-traded bonds list early afternoon Friday.

The company's 5.625% notes due 2018 were the most traded.

This comes two days after the company announced it qualified for coverage under the government's debt guarantee program, which is part of the bailout package passed by Congress.

Also seen trading heavily was an issue of 8.25% bonds due 2020 from PG&E.

An issue of 8.4% perpetual securities from Citigroup Inc. was seen trading heavily Friday, after the company announced it would be laying off 10% of its staff.

GE, Rio Tinto big movers

General Electric was also seen as one of the day's big movers late Friday. Its 5.5% notes due 2011 were seen tightening about 30 bps.

Rio Tinto Finance's 7.125% bonds due 2028 were seen out more than 50 bps.

The Australian iron ore company announced Friday it was delaying an investor meeting as it also tries to deflect a hostile takeover from Australian mining company BHP Billiton.

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