Amgen, Sweden give terms; $25 billion or more expected in coming week; bank paper widens

By Andrea Heisinger and Cristal Cody

New York, May 11 - There weren't any new deals in the high-grade corporate market on Friday, but syndicate desks were gearing up for a busy week ahead.

One source from a larger desk said that Monday will be "busy - very busy."

"We have six trades looking. We're hearing 12 trades all together, although they all may not go."

None of them are of large size, he added.

Between $25 billion and $30 billion of new bonds are expected to price in the coming week from different sectors and ratings.

"It should be front-loaded on Monday, Tuesday, Wednesday," a source said. "We're looking at potential for sub-$10 [billion] for Monday."

Issuers brought $12.85 billion of new bonds during the past week, according to data compiled by Prospect News. Much of that priced on Tuesday and Thursday.

Late Friday, another market source reported seeing 10 to 15 deals to start the coming week and agreed on the range of issuance possible. The market source said that "$20 [billion] to $25 billion is definitely attainable and could go up to $30 billion depending on how the rest of the week goes."

News hit late in the day that JPMorgan Chase & Co. had its credit rating cut to A+ from AA- by Fitch Ratings. This came after news late on Thursday that the banking giant had taken a $2 billion trading loss out of its London office.

Bonds widened across the board on Friday, sources said.

The Markit CDX Series 18 North American Investment Grade index eased 6 basis points to a spread of 109 bps.

Amgen's new bonds tightened in trading, with the 30-year tranche seen about 8 bps better on Friday, a trader said.

"Looks like everything is closing weaker," a trader said.

Bonds in the telecom sector traded 2 bps to 5 bps weaker, and the industrial space was seen out 3 bps on the day, traders said.

Bank and financial paper widened Friday on JPMorgan's announced losses.

JPMorgan's notes were the "most active" in trading early Friday with the bonds 5 bps to 20 bps wider, a trader said.

Goldman Sachs Group, Inc.'s 5.75% notes due 2022 widened 15 bps, and Morgan Stanley's 5.5% notes due 2021 traded 10 bps weaker, erasing Thursday's gains.

Investment-grade bank and brokerage credit default swap costs traded higher.

Bank of America's CDS costs rose 10 bps to 285 bps bid, 295 bps offered. Citi's CDS costs traded up 10 bps to 240 bps bid, 250 bps offered. JPMorgan's CDS costs rose 4 bps to 132 bps bid, 137 bps offered. Wells Fargo's CDS costs traded 4 bps higher to 105 bps bid, 110 bps offered.

On the brokerage side, Merrill Lynch's CDS costs rose 15 bps to 300 bps bid, 315 bps offered. Morgan Stanley's CDS costs moved up 10 bps to 400 bps bid, 415 bps offered. Goldman Sachs' CDS costs climbed 20 bps to 300 bps bid, 315 bps offered.

Discovery Communications, LLC's $1 billion of senior notes (Baa2/BBB/BBB) sold on Thursday stayed marginally tighter in the weaker session on Friday, a trader said.

Beam Inc.'s two tranches of bonds (Baa2/BBB-/BBB) were stronger on Friday.

"Mixed bag," a trader said.

Treasuries ended the day with small gains. The 10-year note yield fell 3 bps to 1.8%. The 30-year bond yield dropped 4 bps to 3.0%.

Amgen gives terms

Amgen Inc. priced $3 billion of senior notes (Baa1/A+/BBB) late on Thursday in three tranches and gave the terms in FWP filings with the Securities and Exchange Commission on Friday.

A $1.25 billion tranche of 2.125% five-year notes priced at a spread of Treasuries plus 140 bps. The notes sold tighter than talk in the 150 bps area.

There was a $750 million tranche of 3.625% 10-year paper sold at Treasuries plus 185 bps. The notes priced in line with guidance in the 185 bps area.

A third part was $1 billion of 5.375% notes due 2043 priced at a spread of Treasuries plus 235 bps. The bonds were sold in line with talk in the 235 bps area.

The bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and UBS Securities LLC.

Proceeds are being used for general corporate purposes and to repurchase shares of common stock.

Amgen was last in the market with a $6 billion issue of senior notes in four parts on Nov. 7, 2011. A 2.5% five-year note from that offering priced at 162.5 bps over Treasuries, and a 3.875% 10-year note sold at 187.5 bps. The 5.15% 30-year bonds from the same deal were sold at 212.5 bps.

In the secondary market, Amgen's notes due 2017 traded at 139 bps bid, 137 bps offered, a source said.

The notes due 2022 narrowed to 178 bps bid, 175 bps offered.

The tranche of long bonds traded stronger at 223 bps bid, 220 bps offered.

The manufacturer and marketer of human therapeutics based on advances in cellular and molecular biology is based in Thousand Oaks, Calif.

Penske comments on deal

The upsized $1.75 billion deal from Penske Truck Leasing Co., LP and its wholly owned subsidiary PTL Finance Corp. that was priced on Tuesday in two maturities of 2015 and 2017 was a success, representatives from the company said in a press release on Friday.

"We are very pleased with the market's reception of our initial bond offering and its recognition of the strength of our business," president and chief executive officer Brian Hard said in the release.

"As long as debt market conditions remain favorable, we will continue reviewing opportunities to access the financial markets to secure long-term funding at attractive rates."

The sale was upsized from $750 million on demand of about $4.5 billion on the books. The deal was done under Rule 144A and Regulation S, with proceeds going to repay outstanding debt to General Electric Capital Corp.

Penske is a transportation services provider based in Reading, Pa.

Sweden prices $2.25 billion

The Kingdom of Sweden announced a sale of $2.25 billion of 0.375% three-year benchmark bonds to yield Treasuries plus 12 bps, or mid-swaps minus 19 bps, in a press release on Friday.

The bonds were priced early on Thursday, a syndicate source said.

The bookrunners were Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs.

The yield on the bonds was the lowest for a three-year syndicate deal so far in 2012, according to the release.

The trade was oversubscribed an hour after the books opened and ended at just over $3 billion, Maria Norstrom, Sweden's head of funding, said in the release.

The distribution was 46% to central banks, 21% to banks and 12% to pension and insurance companies.

About 31% of the investors were from Africa and the Middle East while 24% were from Europe.

The issuer's capital is Stockholm.

Goldman weakens

Goldman Sachs' 5.75% notes due 2022 widened 15 bps in the secondary market on Friday to 337 bps bid, 332 bps offered, a trader said.

Goldman Sachs sold $4.25 billion of the 10-year notes (A1/A-/A) at a spread of Treasuries plus 380 bps on Jan. 19.

The financial services company is based in New York.

Morgan Stanley erases gains

Morgan Stanley's 5.5% notes due 2021 traded 10 bps weaker at 412 bps bid, 402 bps offered on Friday, erasing the previous day's gains of 10 bps, a trader said.

The notes (A2/A/A) priced in a $1 billion offering on Oct. 27, 2011 at a spread of 335 bps over Treasuries.

The investment bank is based in New York.

Discovery firmer

Discovery Communications' 3.3% notes due 2022 traded going out at 154 bps bid, 151 bps offered on Friday, a trader said.

Discovery sold $500 million of the notes at a spread of Treasuries plus 155 bps on Thursday.

The other tranche of 4.95% 30-year bonds traded in to 192 bps bid, 187 bps offered from the issue spread of 195 bps over Treasuries.

The non-fiction media and entertainment company is based in Silver Spring, Md.

Beam tightens

Beam's 1.875% notes due 2017 were stronger in secondary trading at 109 bps bid, 107 bps offered on Friday, a trader said. The $300 million tranche priced at a spread of Treasuries plus 115 bps on Thursday.

Beam's second tranche of 3.25% notes due 2022 also was better at 147 bps bid, 144 bps offered. Beam sold $300 million of the 10-year notes at a spread of 150 bps over Treasuries.

The premium spirits company is based in Deerfield, Ill.

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