Cisco, Unilever Capital, McKesson, PepsiAmericas, Connecticut Light sell bonds; bank risk tightens

By Andrea Heisinger

New York, Feb. 9 – The week got off to a running start in the investment-grade primary market with new bonds from Cisco Systems Inc., Unilever Capital Corp., McKesson Corp., PepsiAmericas, Inc. and Connecticut Light and Power Co.

A source in the primary market gave credit to a good market tone for the solid amount of issuance.

In the secondary, bank names were again in the limelight for trading levels, with Bank of America Corp. seen with the highest-volume bond of the day.

New issues were generally tighter in trading, with the new McKesson bonds seen solidly tighter.

Cisco sells $4 billion

Networking management and equipment company Cisco Systems sold $4 billion of senior notes in two tranches Monday.

The $2 billion of 4.95% 10-year notes priced at 99.774 to yield 4.979%, or Treasuries plus 200 basis points.

The $2 billion of 5.9% 30-year notes priced at 99.777 to yield 5.916%, or Treasuries plus 225 bps.

Both tranches came in at price talk, which was 200 bps for the 10-year notes and 225 bps for the 30-year tranche, a market source said.

A market source also said this was the first venture into the corporate bond market in nearly three years for the San Francisco-based networking management and equipment company.

They are using the proceeds to repay floating-rate notes due this year.

Active bookrunners were Banc of America Securities LLC, Goldman Sachs & Co. and J.P. Morgan Securities Inc.

Unilever prices two tranches

Unilever Capital, guaranteed by three other branches of Unilever, sold $1.5 billion of senior notes in two tranches.

The $750 million of 3.65% five-year notes priced at 99.868 to yield 3.679%, or Treasuries plus 170 bps.

The $750 million of 4.8% 10-year notes priced at 99.897 to yield 4.813%, or Treasuries plus 180 bps.

Both tranches came in line with price talk. The talk was initially the "high 100s" for each tranche, a market source said. It was then revised to 170 bps over Treasuries for the five-year notes and 180 bps over Treasuries for the 10-year notes - the levels at which both tranches priced.

Deutsche Bank Securities Inc., Goldman Sachs, JPMorgan and Morgan Stanley & Co. Inc. ran the books.

McKesson offers $700 million

Health care services company McKesson priced $700 million in equal tranches of five- and 10-year notes.

The $350 million of 6.5% five-year notes priced at 99.936 to yield 6.515%, or Treasuries plus 450 bps.

A $350 million tranche of 7.5% 10-year notes priced at 99.659 to yield 7.549%, or Treasuries plus 450 bps.

Banc of America Securities and JPMorgan were bookrunners.

Pepsi unit does small deal

PepsiAmericas priced $350 million of 4.375% five-year notes at 99.369 to yield 4.517%, or Treasuries plus 250 bps.

This was in line with price talk, which was 250 bps, a market source said.

The company plans to use the proceeds to repay commercial paper.

Bookrunners were Banc of America Securities and JPMorgan.

Connecticut Light sells $250 million

Connecticut Light and Power priced $250 million of first mortgage bonds.

The deal was done in about 15 minutes, a source close to it said.

"It went great," he said. "It lasted 15 minutes and was highly demanded."

The 5.5% 10-year bonds priced at 99.601 to yield 5.553% with a spread of Treasuries plus 250 bps.

This was well on the tight end of price talk, which the source said was in the 262.5 bps area.

The subsidiary of Northeast Utilities plans to use proceeds for refinancing short-term debt and for capital expenditures.

Citigroup Global Markets Inc. and Barclays Capital Inc. ran the books.

Power, energy names eyed

The remainder of the week could be a busy one, with new deals steadily declining by Friday, a primary market source said late Monday.

When asked what the reason was for the rush of new deals Monday, the source hesitated and then said, "I'm not sure."

He guessed they were all on the calendar to price Monday and did not think it was tied to any progress in an economic stimulus package.

"I think it probably had to do with the market tone today," he said.

Based on the healthy amount of deals kicking off the week, a source predicted volume should stay fairly consistent.

"We should be fairly busy for a couple more days," he said. "There are a lot of power and energy companies coming out of blackout, so we should see more of those."

McKesson notes trade well

The new tranches of five- and 10-year notes from health care services company McKesson were each seen 40 bps tighter soon after selling, a trader said.

Both the 6.5% notes due 2014 and 7.5% notes due 2019 priced at 450 bps over Treasuries and were seen at 410 bps bid shortly after.

Connecticut Light tightens

The new Connecticut Light and Power 5.5% notes due 2019 were seen in slightly to 232 bps bid, a trader said.

They priced about 17 bps above that level at 250 bps.

Pepsi bonds in slightly

The new 4.375% bonds due 2014 from PepsiAmericas were seen tightening about 10 bps soon after pricing, a trader said.

The bonds came in to 240 bps bid from the 250 bps price.

Unilever almost unchanged

Initially, the new two-tranche issue from Unilever was missing in trading after it had priced, a trader said.

The notes eventually surfaced in the secondary market but had not moved much.

The 3.65% notes due 2014 were in about 5 bps, to 166 bps bid, 161 bps offered from the 170 bps pricing level.

The 4.8% bonds due 2019 moved even less, seen at 178 bps bid, 173 bps offered from the 180 bps price.

BofA tops trading

An outstanding 2.1% bond due 2012 from Bank of America Corp. was seen as the day's top mover early Monday afternoon.

The bank's stock was up as the outcome of the government's latest stimulus package is awaited.

Also doing well in trading volume were parts of two recent issues.

The 10- and 30-year tranches of the Altria Group Inc. issue priced last week were seen in the second and third spot.

And the 4.7% notes due 2019 that also priced last week from Procter & Gamble Co. were also doing well.

Bank, broker CDS tighten

Bank and broker credit-default swaps were each seen tighter late Monday afternoon, a trader said.

Bank names were seen 5 to 20 bps tighter, while brokers were over a tighter range of 5 to 10 bps tighter.

Citigroup, Credit Suisse day's movers

Financial names were on opposite ends of the spectrum as far as outstanding bonds went late Monday.

A 5.3% note due 2012 from Citigroup Inc. was seen about 50 bps tighter versus last week.

On the other side was Credit Suisse, whose 5.25% bonds due 2011 were more than 70 bps wider than the previous week.

The company releases earnings Wednesday, and it is widely expected a loss will be reported.

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