Pacific Gas & Electric, Handelsbanken reopen, price new notes; Anheuser busy; Wal-Mart gains

By Andrea Heisinger and Cristal Cody

New York, March 26 - Pacific Gas & Electric Co. and Svenska Handelsbanken AB each priced and reopened bonds on Friday to end a week of steady issuance.

San Francisco-based PG&E added $250 million to its issue of 5.8% notes due 2037. It brings the outstanding amount to $950 million.

Nordic bank Svenska Handelsbanken sold $1.6 billion in two tranches, one of which was a reopening of notes due 2014. There was also a $1 billion tranche of new 10-year notes.

Issuance for the week peaked early, with the bulk of deals coming on Tuesday and Wednesday.

The coming week is expected to be just as top heavy as issuers try to get in before the Easter and Passover holidays.

"It should be fairly busy," a source said. "It's going to die down at the end [of the week]."

Meanwhile, secondary trading was a "little light" on Friday, a source said.

"Volume was a little light, too. Just a hair over fairly low," a source said.

In fact, overall Trace volume fell 25% to about $10.8 billion, according to a source.

"Flow was a little light today," one source said. "On the East Coast, most of the schools have spring break next week. People may be taking today off and taking a holiday early. It did seem like it was on the lighter side."

Still, there were a few bright spots in the investment-grade market. In secondary trading, the new 10-year paper from Anheuser-Busch InBev Worldwide Inc. was drawing interest while Wal-Mart Stores Inc.'s new offering also was tighter, according to sources.

In addition, the 5.8% notes due 2037 that Pacific Gas & Electric reopened were firmer on Friday, a source said.

Meanwhile, the CDX Series 14 North American high-grade index ended Thursday tightened 1 bp to a mid bid-asked spread level of 87 bps, a market source reported.

Elsewhere, after Treasuries had weakened by double digits mid-week, U.S. government bonds were seen firmer on Friday.

The 10-year Treasury note yield tightened 3 bps to 3.85%, and the yield on the 30-year Treasury bond firmed 1 bp to 4.75%. On Wednesday, Treasury notes, such as the 10-year benchmark note, moved out by as much as 17 bps.

Pacific Gas reopens 30-years

Pacific Gas & Electric reopened its issue of 5.8% senior notes due 2037 to add $250 million, according to an FWP filing with the Securities and Exchange Commission.

The notes (A3/BBB+) priced to yield Treasuries plus 115 bps.

Total issuance is now $950 million, including $700 million issued on March 8, 2007.

Active bookrunners were Barclays Capital and Morgan Stanley & Co. Inc.

Proceeds will be used to repay outstanding commercial paper.

The electric and natural gas company is based in San Francisco.

Handelsbanken sells $1.6 billion

Svenska Handelsbanken priced $1.6 billion of notes (Aa2/AA-/AA-) in two tranches late in the day via Rule 144A, a market source said.

The company reopened a tranche of 4.875% notes due 2014 to add $600 million. They priced to yield Treasuries plus 78 bps.

Total issuance for the notes is now $1.85 billion including $1.25 billion issued on June 10, 2009 at Treasuries plus 250 bps.

As well as the add on, the bank priced a $1 billion tranche of 5.125% 10-year notes priced at 133 bps over Treasuries.

Bookrunners were Bank of America Merrill Lynch and Citigroup Global Markets for the notes due 2014 and Bank of America Merrill Lynch, Citigroup and J.P. Morgan Securities for the 10-year notes.

The bank is based in Stockholm, Sweden.

Spreads attract issuers

The past week saw more than a few high-profile issuers come out of the woodwork, leading to a fairly steady stream of new deals.

That could continue in the coming week as some companies try to squeeze paper in ahead of holidays, and to take advantage of the attractive borrowing costs on offer.

"It's been pretty cheap," a source said on Friday, pointing to a recent sale from Wal-Mart Stores Inc. as evidence.

Nearly all of the week's sales came tight to price guidance and also were well oversubscribed.

Spreads have continued to contract after being at record highs over the past couple of years.

One source said that investment-grade-rated companies, "even the low BBBs" are all finding the bond market attractive.

"We should be busy for a couple days [next week]," he said.

Pacific Gas tighter

After Pacific Gas & Electric reopened its 5.8% notes due 2037 to add $250 million on Friday, secondary traders saw the notes firm.

The notes were launched at 115 bps and later in trading were seen offered at 111 bps, a source said.

Another source "saw them offered at 110."

Anheuser-Busch long paper heats up

Anheuser-Busch InBev's new long paper (Baa2/BBB+) is attracting the most attention from its $3.25 billion of guaranteed notes that it sold in four tranches on Wednesday, according to a source.

The Leuven, Belgium-based brewery's offering included three-year fixed-rate notes, three-year floating-rate notes, five-year notes and 10-year notes.

The 5% notes due 2020 were seen Friday in the secondary at 117 bps bid, 110 bps offered, according to a trader.

The notes priced on Wednesday at Treasuries plus 123 bps.

"Looks like the 10-year seems to be where all the action was. I'm not seeing anything on the others," the trader said.

"The short paper has been hot for a long time now and they've haven't been issuing much in the 30-years," the trader said, adding: "Ten-years are definitely getting a lot of play for people reaching for the yield."

Wal-Mart notes 'going pretty well'

Wal-Mart Stores' new $2 billion of senior notes (Aa2/AA) were stronger Friday after two days in the secondary market, a source told Prospect News.

"That deal has been going pretty well. They tightened a little bit today."

The 2.875% notes due 2015 were trading on Thursday around 35 bps bid, 36 bps offered, the source said.

"Today, they're trading around 33 bps."

The Bentonville, Ark.-based discount retailer priced the notes at Treasuries plus 45 bps on Wednesday.

In addition, the five-year notes were quoted earlier on Friday at 37 bps bid, 32 bps offered.

Also, although only slight activity was seen in Wal-Mart's new 5.625% bonds due 2040, the offering was stronger on Friday, the source said.

"I did see the 30-years offering early this morning at 85," the source said. "Yesterday, I saw a quote of 92, 91 and it does look like 91 bps was the offer side this morning."

The bonds priced at Treasuries plus 95 bps on Wednesday.

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