Two FirstEnergy utilities price deals as pace slows; Morgan Stanley firms; JPMorgan stable

By Aleesia Forni and Cristal Cody

Virginia Beach, June 5 – A pair of utility trades sold during a quieter session for the high-grade bond market on Thursday.

Pennsylvania Electric Co. brought a $200 million issue of 4.15% notes, while Metropolitan Edison Co. priced $250 million of 4% notes.

Both FirstEnergy Corp. subsidiaries were in the market with long 10-year deals and each sold at the tight end of price talk.

Despite the decline in activity on Thursday, the primary has still seen more than $30 billion of paper price this week.

Friday’s nonfarm payrolls data is likely to keep issuers on the sidelines to close out the week.

After remaining flat over the week, investment-grade credit spreads tightened on Thursday, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 2 basis points to a spread of 60 bps.

Financial paper was flat to about 2 bps tighter on the day, according to a market source.

In the secondary market, Morgan Stanley & Co. Inc. 3.875% notes due 2024 traded about 2 bps better, a source said.

JPMorgan Chase & Co.’s 3.625% notes dues 2024 were flat to slightly better, according to market sources.

“It’s a little more quieter today,” a source said.

Pennsylvania Electric new issue

A less active primary saw Pennsylvania Electric sell $200 million of 4.15% senior notes due 2025 with a spread of Treasuries plus 160 basis points on Thursday, according to an informed source.

The notes (Baa2/BBB-/) sold at the tight end of talk, which was set in the Treasuries plus 165 bps area.

Pricing was at 99.725 to yield 4.179%.

Bookrunners for the Rule 144A and Regulation S deal were BofA Merrill Lynch, BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc., Goldman Sachs & Co. and Keybanc Capital Markets LLC.

The electric subsidiary of FirstEnergy Corp. is based in Akron, Ohio.

Metropolitan Edison brings $250 million

Metropolitan Edison also sold its new deal at the tight end of talk on Thursday.

The Akron, Ohio-based company, also a subsidiary of FirstEnergy Corp., priced $250 million of 4% 10-year senior notes at Treasuries plus 145 bps.

Talk had been set in the 150 bps over Treasuries area.

BofA Merrill Lynch, BNP Paribas Securities Corp. and Credit Agricole Securities (USA) Inc. were the bookrunners for the Rule 144A and Regulation S deal.

Morgan Stanley firms

In secondary activity, Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) firmed about 2 bps to 123 bps offered, a source said.

The 10-year notes climbed to 100.84 during the session from 100.31 on Wednesday, according to a market source.

Morgan Stanley sold $3 billion of the notes at 99.124 to yield 3.982%, or a spread of Treasuries plus 130 bps, on April 23.

The financial services company is based in New York City.

JPMorgan stable

JPMorgan Chase’s 3.625% senior notes due 2024 (A3/A/A+) were mostly flat at 106 bps offered, a source said.

The notes traded higher at 100.10 on Thursday from 99.69 on Wednesday, according to a market source.

JPMorgan sold $2 billion of the notes on May 6 at par to yield a spread of Treasuries plus 110 bps.

The financial services company is based in New York City.

Bank/brokerage CDS costs flat to lower

Investment-grade bank and brokerage CDS prices were lower on Thursday, according to a market source.

Bank of America Corp.’s CDS costs declined 5 bps to 61 bps bid, 64 bps offered. Citigroup Inc.’s CDS costs also declined 5 bps to 61 bps bid, 64 bps offered. JPMorgan Chase & Co.’s CDS costs were down 4 bps at 50 bps bid, 53 bps offered. Wells Fargo & Co.’s CDS costs ended 1 bp lower at 33 bps bid, 36 bps offered.

Merrill Lynch’s CDS costs declined 5 bps to 65 bps bid, 68 bps offered. Morgan Stanley’s CDS costs ended 4 bps lower at 65 bps bid, 68 bps offered. Goldman Sachs Group, Inc.’s CDS costs declined 6 bps to 71 bps bid, 74 bps offered.

Stephanie Rotondo contributed to this review

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