Manitoba, Excel, PG&E price as market focuses on Yellen report; DirecTV stronger, Kraft weaker

By Aleesia Forni and Cristal Cody

Virginia Beach, May 7 - The Province of Manitoba, Excel Trust LP and Pacific Gas and Electric Co. sold bonds on Wednesday as Federal Reserve chairwoman Janet Yellen testified before the Joint Economic Committee of Congress.

In primary market action, the Province of Manitoba sold $800 million of 3.05% global debentures tight of talk during the session.

The notes due 2024 priced with a spread of mid-swaps plus 39 basis points, according to a market source.

Meanwhile, Excel Trust priced a $250 million issue of 4.625% 10-year notes at Treasuries plus 210 bps.

Pacific Gas sold $300 million of floating-rate senior notes due 2015 to yield Libor plus 20 bps on Wednesday, according to an FWP filed with the Securities and Exchange Commission.

Also on Wednesday, Fannie Mae announced plans to issue five-year Benchmark Notes, according to a company press release.

The primary's pace was lighter compared to the previous session, with roughly $1.3 billion of new issuance pricing on Wednesday.

This compares to 10 issuers pricing $7.5 billion of high-grade paper during Tuesday's session.

One source noted the lack of primary action was due in part to Yellen's statement to Congress on Wednesday.

"That's what everybody was focused on today," the source said of the testimony.

Yellen told Congress that geopolitical tensions and weakness in the housing market pose risks to the U.S. economy.

Wednesday's primary activity brings the week's total to nearly $13 billion of investment-grade new issuance for the week.

Investment-grade bonds ended the session stronger after easing at the start of the day, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 1 bp to a spread of 65 bps.

In the secondary market, DirecTV Holdings LLC's and DirecTV Financing Co.'s 4.45% senior notes due 2024 continued to trade stronger since reports emerged a week ago that AT&T Inc. has discussed a potential merger, according to a market source.

Kraft Foods Group Inc.'s 6.875% bonds due 2039 were slightly weaker on the day after active trading in the previous session, according to a market source.

Manitoba prices tight

The Province of Manitoba priced $800 million of 3.05% 10-year global debentures on Wednesday at mid-swaps plus 39 bps, according to a market source and an FWP filed with the SEC.

The notes (AA/Aa1/) sold at 99.65 to yield 3.091%, or Treasuries plus 50.65 bps.

Pricing came tight of guidance, which was set in the low 40 bps over mid-swaps area.

The bookrunners were CIBC World Markets Corp., BMO Capital Markets Corp., HSBC Securities (USA) Inc. and TD Securities (USA) LLC.

Proceeds will be used for general government purposes

PG&E sells floaters

Pacific Gas and Electric priced $300 million of floating-rate senior notes due May 11, 2015 at par to yield Libor plus 20 bps on Wednesday, according to an FWP filed with the SEC.

BofA Merrill Lynch and Mizuho Securities USA Inc. were the joint bookrunners.

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

Excel brings 10-years

Excel Trust sold $250 million of 4.625% senior notes (Baa3/BBB-/BBB-) due 2024 with a spread of Treasuries plus 210 bps, according to an informed source and an FWP filed with the SEC.

Pricing was at 99.477 to yield 4.691%.

Barclays, Wells Fargo Securities LLC, KeyBanc Capital Markets LLC and U.S. Bancorp Investments Inc. were the joint bookrunners.

The notes will be guaranteed by Excel Trust, Inc.

Proceeds will be used to repay existing debt, for general corporate purposes and for working capital purposes.

Excel Trust is a San Diego-based real estate investment trust focused on retail properties.

Fannie Mae eyes offering

Fannie Mae is planning to issue Benchmark Notes due June 20, 2019, according to a company press release.

The issue will settle on May 12.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Nomura Securities International Inc. are the joint lead managers.

The co-managers include CastleOak Securities, L.P, Citigroup Global Markets Inc., FTN Financial Capital Markets, and Multi-Bank Securities Inc.

DirecTV rises

DirecTV's 4.45% notes due 2024 rose to 104.07 on Wednesday, up from 103.46 in the previous session, according to a market source.

DirecTV sold $1.25 billion of the 10-year notes (Baa2/BBB/) on March 17 at 99.63 to yield 4.496%.

The digital entertainment company is based in El Segundo, Calif.

Kraft softer

Kraft Foods' 6.875% bonds due 2039 traded lower at 128.47 from the 129 area on Tuesday, according to a market source.

The notes were quoted in the 133 area on Friday.

Kraft sold $750 million of the bonds in 2008 at 98.677 to yield 6.978%.

The packaged food and beverage company is based in Northfield, Ill.

Bank/brokerage CDS flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher, according to a market source.

Bank of America Corp.'s CDS costs eased 1 bp to 66 bps bid, 69 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs rose 1 bp to 54 bps bid, 57 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 35 bps bid, 38 bps offered.

Merrill Lynch's CDS costs ended flat at 70 bps bid, 74 bps offered. Morgan Stanley's CDS costs were unchanged at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.'s CDS costs closed unchanged at 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

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