Lincoln National, Japan Finance, Swedbank offer bonds, others held back; most financials slip

By Andrea Heisinger and Paul Deckelman

New York, June 17 - The number of new deals remained steady Wednesday with Lincoln National Corp., Japan Finance Corp. and Swedbank AB pricing bonds.

It was a continuation of the low volume from the two prior days of the week. Issuance is expected to taper off in the next couple of days, a source said.

"It's going to be dead," he said. Another market source said more deals were expected Wednesday, but some issuers held off for reasons unknown.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 12 North American high-grade index widened by 4 basis points to a mid bid-asked spread level of 140 bps.

Advancing issues - which on Tuesday had held a three-to-two edge over decliners - continued to lead them on Wednesday, by around an eight-to-seven ratio.

Overall market activity, reflected in dollar volumes, was up nearly 11% from Tuesday's levels.

Spreads in general were seen a little tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year issue rose by 4 bps to 3.69%.

The new Lincoln National 10-year issue was seen by traders to have firmed from the bonds' pricing levels earlier in the session.

However, other financials such as Pacific Life Insurance Co.'s Tuesday issue and recently priced bonds from Citigroup Inc. were seen having weakened on the day, as did such non-financials as the new Valspar Corp. issue.

Lincoln National prices 10-years

Lincoln National sold $500 million of 8.75% 10-year senior notes at Treasuries plus 525 bps.

Bookrunners were Banc of America Securities, J.P. Morgan Securities and Citigroup Global Markets.

Proceeds will be used for general corporate purposes including making contributions of capital to insurance and other subsidiaries and to repay short-term debt.

The sale was done concurrently with the sale of $600 million of shares.

The holding company for insurance and investment businesses is based in Philadelphia.

Japan Finance offers guaranteed bond

Japan Finance priced $2.5 billion of 2%two-year guaranteed bonds at Treasuries plus 90.8 bps, according to an FWP Securities and Exchange Commission filing. The debt is guaranteed by the Japanese government.

The sale was first announced Monday in an SEC filing. It was officially announced Tuesday, a source close to the sale said, but was delayed to allow overseas investors in on the books, among other reasons.

"It was announced yesterday," he said, "but we closed it out today just as kind of an administrative thing."

These types of deals are "never one-day trades," he added to further explain the delay.

Bookrunners were Deutsche Bank Securities, Barclays Capital and Morgan Stanley & Co.

Proceeds will be used for the operations of Japan Bank for International Cooperation, the international arm of the issuer.

The government-owned issuer promotes socioeconomic development in Japan and is based in Tokyo.

Swedbank prices government-backed notes

Swedbank sold $1.5 billion of notes in two tranches with the guarantee of the Swedish government, a market source said.

The $500 million of floating-rate notes due 2013 priced at par to yield three-month Libor plus 45 bps. A second tranche of $1 billion in 2.9% notes due 2013 priced at a spread of Treasuries plus 119.3 bps.

They were priced via Rule 144A.

Bookrunners were Barclays Capital, J.P. Morgan Securities and RBS Securities.

The financial services company is based in Stockholm, Sweden.

Continental sells pass-throughs

Continental Airlines priced $389.687 million of 9% class A pass-through certificates due 2018, according to an FWP Securities and Exchange Commission filing. They priced Tuesday.

The certificates priced at par and have an initial average life of 5.9 years. The final expected distribution date is July 8, 2016 and they have a make-whole spread of Treasuries plus 75 basis points.

Morgan Stanley & Co., Goldman Sachs & Co. and Calyon Securities were bookrunners.

Proceeds will be used by the Houston-based airline to finance the purchase of five new aircraft and refinance 12 others bought between 1998 and 1999.

Primary volume falters

The number of deals coming into the primary, although steady compared to the previous couple of days, did not pick up Wednesday and likely won't for the remainder of the week.

"I know we and others away were expecting more today," a syndicate source said. "I'm not sure what caused people to step on the brakes."

The tone wasn't much worse or better, but some desks and issuers went with the "no go" call early on, he said.

Issuance for Thursday depends on how the tone looks at the beginning of the day, he said, although not much is anticipated. There may be some hangover, with deals that were expected to go Wednesday pricing a day late.

"We'll see," the source said, adding that he didn't know for sure which issues were held.

Lincoln bonds lead the way

A trader saw the new Lincoln National 8.75% notes due 2019 trading at a spread over comparable Treasuries of 505 bps on the bid side.

That represented a solid improvement in the Radnor, Pa.-based financial services company's new bonds, $500 million of which had priced earlier in the session at 525 bps over.

However, that was an unusual occurrence among the general easiness seen in the sector. For instance, the trader saw Newport Beach, Calif.-based Pacific Life Insurance Co.'s new 9.25% bonds due 2039 at 483 bps over, having widened from the 475 bps level at which the company had priced $1 billion of those bonds on Tuesday.

Citi widens out

Among the banking names, he saw Citigroup's recently priced 8½% notes due 2019 trading as wide as 465 bps bid, 460 bps offered, versus the 437.5 bps spread at which the New York -based banking giant had priced $1 billion of the bonds last Thursday, as a reopener to its existing issue.

A market source at another desk saw those Citigroup '19s having widened 10 bps on the session to 461 bps.

Another source meantime saw Citi's 5% notes due 2014 having widened out by more than 60 bps on the session to the 635 bps mark.

Citi's bonds were among the most actively traded issues, with around $60 million of the 81/2s changing hands and with its 1.375% notes due 2011 seen at 21 bps over, on volume of nearly $90 million. Although those bonds were a little wider on the session, the continued to trade tight to 48 bps level at which Citi priced the $1.3 billion of bonds on June 4, as part of a $5 billion, four-tranche issue.

The first trader said that overall, the financials were "weaker this morning, but came back pretty fairly this afternoon."

Valspar seen easier

Among the non-financial names, a trader saw Valspar Corp.'s 7.25% notes due 2019 trading at 365 bps bid 355 bps over.

That was wider than the 357 bps bid, 352 bps offered level at which the Minneapolis-based paint manufacturer's $300 million of paper - upsized from $250 million originally - had traded on Tuesday on the break. Those bonds had priced earlier in the session at 362.5 bps over

Deutsche Telekom tightens up

However, a market source saw Deutsche Telekom International Finance BV's 6% notes due 2019 trading at 183 bps over.

That was well in from the 237.5 bps level at which the international telecommunications company had priced its $750 million of notes on Monday, as part of a $1.5 billion two-part offering. Some $36 million of the 6s had changed hands as of mid-afternoon.

Also among communications sector names, a market source saw Verizon New England's 7.875% notes due 2029 among the larger gainers on the day, with the bonds having tightened more than 20 bps to the 290 bps over level.

Anadarko shows improvement

Outside of the communications sphere, Anadarko Petroleum Corp.'s 6.95% notes due 2019 firmed to 310 bps on the session. That was well in from the 325 bps over level at which the Houston-based energy exploration and production company priced its $300 million of bonds on June 9, as part of a $900 million three-part transaction. About $25 million of the oil company's bonds were seen having changed hands.

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