Bank of NY, Westpac, General Mills add to week's volume; bank paper 25 bps to 40 bps wider

By Andrea Heisinger and Cristal Cody

New York, Nov. 17 - A three-tranche sale from the Bank of New York Mellon Corp. led Thursday's continuing crop of new deals.

A promising market tone at the top of the day led several issuers to receive a "go" call although those gains were lost by the close.

Westpac Banking Corp. followed in the footsteps of ANZ Banking Group Ltd. by selling covered bonds. ANZ became the first Australian financial name to price covered bonds on Tuesday. Westpac sold $1 billion of five-year bonds under Rule 144 and Regulation S.

Another $1 billion trade came from General Mills, Inc. The Minnesota-based company priced 10-year debt.

There was a $400 million deal of 10-year notes from Stanley Black & Decker, Inc.

Chemical company FMC Corp. priced $300 million of 10-year debt.

More utility names made their way to the primary, including Southern California Edison Co. with a $250 million sale of 30-year first-mortgage bonds.

A quick $250 million trade of one-year floating-rate notes came from Pacific Gas & Electric Co.

There was good enough sentiment at the top of the day for volume to swell quickly.

"When we were on calls this morning, futures were unchanged," said a syndicate source who worked on some of the day's deals.

"Then everything kind of changed and we ended with the [Dow] down 134 [points]."

Sources said they weren't entirely sure why the tone took a hit throughout the day.

"It was probably mostly euro-related," one source said. "Honestly, I wasn't paying much attention."

The source also said that the Occupy Wall Street scuffles with police and the march on the New York Stock Exchange could have "had some effect, but probably not much" on the day's tone.

Friday's issuance volume is up in the air with some calls in the morning, but "nothing concrete" on the calendar, the source said.

Overall trading volume dropped more than 15% to about $10.5 billion on Thursday.

Bonds traded weaker on the day, and the Markit CDX Series 17 North American high-grade index eased 2 basis points to a spread of 136 bps.

No immediate trading was seen in Bank of New York Mellon's new tranches, but bank and financial paper traded 25 bps to 40 bps wider and were led by Bank of America Corp. and Goldman Sachs Group Inc., traders said.

American Express Credit Corp.'s 2.8% notes due 2016 that it reopened the previous day also traded wider.

"Financials are particularly weak," a trader said.

Investment-grade bank and broker credit default swaps costs rose, a sign of lessened investor confidence in the sector, a trader said. Bank CDS costs rose 5 bps to 20 bps. Brokerage CDS costs traded 10 bps to 25 bps higher, led by Morgan Stanley.

Stanley Black & Decker's notes traded the strongest in the new issues sold on Thursday, according to traders. The bonds firmed more than 10 bps in the secondary.

General Mills' new notes firmed 1 bp, while L-3 Communications, Inc. traded about 5 bps tighter.

Elsewhere in the market, Gap Inc.'s bonds were unchanged after the company released earnings late in the day.

Treasuries made gains on a flight-to-safety bid. The 10-year note yield fell to 1.94% from 1.97%. The 30-year bond yield dropped 5 bps to 2.96%.

Bank of NY's three tranches

The Bank of New York Mellon priced $1.25 billion of senior medium-term notes, series G, (Aa2/AA-/AA-) in three tranches, a source close to the trade said.

A $250 million tranche of three-year floating-rate notes priced at par to yield three-month Libor plus 85 bps.

There was a $500 million tranche of 1.7% three-year notes sold at a spread of Treasuries plus 135 bps.

Finally, a $500 million tranche of 2.4% five-year notes priced at Treasuries plus 158 bps.

Citigroup Global Markets Inc., UBS Securities LLC and BNY Mellon Capital Markets LLC were bookrunners.

The financial services company is based in New York City.

General Mills' $1 billion

General Mills priced $1 billion of 3.15% 10-year senior notes on Thursday at a spread of Treasuries plus 125 basis points, a market source said.

The notes (Baa1/BBB+/BBB+) were sold at 99.589 to yield 3.198%. They have a make-whole call at Treasuries plus 20 bps and feature a change-of-control put at 101.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co., LLC were bookrunners.

The proceeds will be used to repay a portion of outstanding commercial paper and a portion of 6% notes due Feb. 15, 2012 with any remaining proceeds used for general corporate purposes.

In the secondary market, the notes due 2021 were quoted trading at 122 bps offered and later tighter by 1 bp at 124 bps bid, 121 bps offered, traders said.

The consumer food company is based in Minneapolis.

Westpac's covered bonds

Westpac Banking sold $1 billion of 2.45% five-year covered bonds (Aaa/AAA) to yield Treasuries plus 160.55 bps, a market source said.

The debt was sold under Rule 144A and Regulation S.

Barclays Capital Inc., Bank of America Merrill Lynch, Nomura Securities and Westpac Securities were bookrunners.

The bank and financial services company is based in Sydney, Australia.

Black & Decker's 10-years

Stanley Black & Decker priced $400 million of 3.4% 10-year senior notes (Baa1/A/A-) to yield Treasuries plus 145 bps, a source close to the trade said.

The paper was priced at the tight end of talk in the 150 bps area, plus or minus 5 bps.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. were bookrunners.

The proceeds will be used to reduce short-term borrowings and for general corporate purposes.

The deal is guaranteed by Black & Decker Corp.

Stanley Black & Decker's notes due 2021 firmed soon after trading to 144 bps bid, a source said.

Going out, the notes traded "much better" at 132 bps bid, 129 bps offered, said a trader at another desk.

The power- and hand-tool and accessories company is based in New Britain, Conn.

L-3 prices five-year debt

L-3 Communications sold $500 million of 3.95% five-year senior notes (Baa3/BBB-/BBB-) at a spread of Treasuries plus 325 bps, a market source said.

A source said they were also talked at 325 bps.

Bank of America Merrill Lynch, Barclays Capital Inc. and Deutsche Bank Securities Inc. were active bookrunners.

The proceeds will be used to redeem $500 million of 6.375% senior subordinated notes due 2015, together with cash on hand.

The deal is guaranteed by the company's domestic subsidiaries.

L-3 last priced debt in a $650 million sale of 10-year paper on Feb. 2 at 153 bps over Treasuries.

In trading, the notes were seen soon after pricing at 320 bps offered, a trader said.

The notes due 2016 traded tighter going out at 320 bps bid, 315 bps offered, another trader said.

The government-communications and intelligence contractor is based in New York City.

FMC prices 10-years

FMC sold $300 million of 3.95% 10-year senior notes (Baa1/BBB+) at a spread of Treasuries plus 205 bps, an informed source said.

The notes priced at the tight end of talk in the 210 bps area, plus or minus 5 bps, the source said.

Bookrunners were Bank of America Merrill Lynch and Citigroup Global Markets Inc.

The proceeds will be used to pay down existing debt under a revolving credit facility and for general corporate purposes, including stock repurchase.

FMC last priced debt in a $300 million deal of 5.2% 10-year notes on Nov. 24, 2009, at 190 bps.

The diversified chemical company is based in Philadelphia.

Edison sells $250 million

Southern California Edison priced $250 million of 3.9% 30-year first- and refunding-mortgage bonds, series 2011E, (A1/A/A+) at a spread of Treasuries plus 98 bps, a source said.

Deutsche Bank Securities Inc., Ramirez & Co., Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

The proceeds will be used to repay commercial paper or for general corporate purposes.

The electric company is based in Rosemead, Calif.

Pacific Gas prices floaters

Pacific Gas & Electric priced $250 million of one-year senior floaters (A3/BBB+) at par to yield three-month Libor plus 45 bps, according to an FWP with the Securities and Exchange Commission.

RBS Securities Inc. and Wells Fargo Securities LLC were bookrunners.

The proceeds will be used to support the liquidity requirements relating to commodity hedging activities by repaying commercial paper.

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

AmEx Credit weaker

American Express Credit's 2.8% medium-term notes due 2016 traded wider early Thursday at 195 bps bid, 190 bps offered, a trader said.

The company sold $1 billion in an add-on to the five-year notes (A2/BBB+/A+) at a spread of Treasuries plus 190 bps.

The financial services company is based in New York City.

Bank of America widens

Bank of America's 5% notes due 2021 were seen closing Thursday at 530 bps bid, 515 bps offered, about 35 bps wider on the day, a trader said.

The notes were quoted on Nov. 3 at 400 bps bid, 390 bps offered.

Bank of America sold the notes on May 10 at a spread of 185 bps over Treasuries.

The financial services company is based in Charlotte, N.C.

Goldman drops

Goldman's 5.25% senior notes due 2021 widened about 35 bps on Thursday to 430 bps bid, 415 bps offered, a trader said.

The issue was reopened on Oct. 25 in a $1 billion offering priced at a spread of 295 bps over Treasuries.

The financial services company is based in New York City.

Gap flat

Gap's 5.95% notes due 2021 traded Thursday at 93.75 bid, 94.50 offered before the retailer released third-quarter earnings late in the day, a trader said.

"Looks like earnings are largely in line with expectations so it should be unchanged post earnings, but nothing's traded since it just came out," the trader said.

The notes (Baa3/BB+/BBB-) priced at 99.65 on April 7.

Gap said profit fell to $193 million, or 38 cents a share, in the quarter ended Oct. 29 from $303 million, or 48 cents a share, in the same period last year. Revenue fell 2% to $3.59 billion.

The clothing retailer is based in San Francisco.

Paul Deckelman contributed to this review

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