KfW, AmEx Credit price notes, BB&T plans trust preferred issue; secondary tone slides late in day

By Andrea Heisinger

New York, Sept. 2 - German bank KfW and American Express Credit Corp. priced offerings Tuesday, leading off issuance for the holiday-shortened week.

The primary market tone was uncertain, sources said, as it has been for the last several weeks.

Issuers are essentially waiting for another company to issue so they can see what levels look like, one source said.

The secondary market was uneventful, with no big movers, a secondary source said.

KfW prices $4 billion deal

The German government-owned bank KfW priced $4 billion of 3.25% three-year notes Tuesday at 99.745.

Full terms were not available at press time.

Barclays Capital Inc., Deutsche Bank Securities Inc. and HSBC Securities ran the books.

AmEx Credit sells Internotes

American Express Credit priced one of its first issues of Internotes Tuesday after recently launching the program.

The company priced $167.918 million of 6.05% three-year notes at par.

Banc of America Securities LLC and Incapital LLC were agents.

BB&T to bring trust preferreds

A funding unit of BB&T announced Tuesday it will price enhanced trust preferred securities at par of $25. Pricing is expected Wednesday, a source close to the deal said.

The securities have an initial maturity in 2063, with a final maturity in 2068.

They are callable after five years.

Merrill Lynch, Pierce, Fenner & Smith Inc., BB&T Securities and Morgan Stanley & Co., Inc. ran the books.

Issuers watch from primary sidelines

Potential issuers are out there, a source said Tuesday, but are watching what others do before entering the market themselves.

"We had a lot of observers today," he said. "The day was kind of all over the place and people were hesitant to come in."

Among the things making the market fluctuate were "a huge increase in equities" along with a drop in oil prices, the source said.

"It's just difficult to look forward for the rest of September, maybe even October," a source said.

A backlog exists from the last few weeks, but potential issuers are hesitant to be guinea pigs for the market, he said.

"People are hesitant to be the first to move," he said. "Everyone's waiting to see what levels are. I think we'll definitely see some tomorrow, but we could see more Thursday."

Secondary down late in day

The secondary market was seen lower mid afternoon after a solid open, a source said.

"Things looked better this morning," he said. "We lost ground as the Dow gave back."

The Dow was up 200 points early in the day, but down 17 points by mid afternoon, he said. It finished the session lower by 26.63 points.

There were no issuers showing big movement, a source said. After a glut of companies releasing earnings in the last few weeks, there were none Tuesday to sway spreads.

"Nothing in particular stands out," he said. "Things started off good, but then the good feeling kind of faded."

Like the primary market, sources are expecting volume in the secondary to be up Wednesday when more companies decide to issue and investors come out of the woodwork.

Pfizer, Regions Financial day's movers

The largest movers for the day had moderate shifts on a relatively quiet day.

Pharmaceutical company Pfizer, Inc.'s 6.5% notes due 2018 were seen tightening more than 10 bps. The company was in the news Tuesday, along with Bristol-Myers Squibb, for an experimental blood thinning medicine that was shown to help some heart ailments, but which boosted bleeding.

Regions Financial Corp. was also in the news, for assuming more than $900 million in deposits from the failed Integrity Bank.

Its 7% bonds due 2011 were seen widening more than 10 bps.

Bank CDS tighten slightly

Major banks' credit-default swaps were 2 bps to 8 bps tighter late afternoon Tuesday, a trader said.

Brokerage CDS costs were seen 5 to 10 bps tighter.

One of the biggest movers of the day was Lehman Brothers, tightening 15 bps to 300 bps bid, 320 bps offered.

This was likely due to the news that Korea Development Bank is indeed in talks to acquire Lehman, something the Korean bank had initially denied.

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