Bacardi, Verizon, Staples sells bonds as tone remains up; Time Warner Cable, Con Ed, Illinois Tool firm

By Andrea Heisinger and Paul Deckelman

New York, March 24 - A smaller crop of new deals priced Tuesday, with Bacardi Ltd., Verizon Communications Inc. and Staples Inc. coming to the market.

Terms were also announced for sales that priced late Monday, including those from Citigroup Funding Inc. and Time Warner Cable Inc.

The tone remained much the same as Monday, a source said, with a decrease in deals due to the large amount of accounts that played in the Time Warner sale.

World Bank also announced an upcoming benchmark-size deal, with pricing expected before Friday.

In the secondary sphere on Tuesday, a market source said the widely followed CDX Series 12 North American high-grade index unchanged on the day at a mid bid-asked spread level of 185 bps.

Advancing issues remained ahead of decliners, but only by a narrow margin.

Overall market activity, reflected in dollar volumes, rose by 23% from the levels seen on Monday.

Spreads in general were seen a little tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year issue increased by 4 bps to 2.70%.

With another busy new-issue day, secondary activity focused upon newly-priced or recently priced bonds.

Not much movement was seen in the new Verizon notes, but there was some firming seen in Monday issues such as Time Warner Cable Inc., Consolidated Edison Co. of New York Inc. and Illinois Tool Works Inc.

Bacardi sells two tranches

Spirits maker Bacardi sold $500 million notes in two tranches via Rule 144A Tuesday in a sale that went overnight.

The $250 million of 7.45% five-year notes priced at 575 bps, while the $250 million of 8.2% 10-year notes priced inversely at Treasuries plus 550 bps.

Both tranches priced in line with talk of the 575 bps area for the five-year notes and the 550 bps area for the 10-year notes, a source close to the deal said.

Books for the deal totaled about $1 billion, or two times the issue's amount, a source close to the sale said.

The offering was brought overnight, but not because there were difficulties getting the sale done.

"People were unfamiliar with it," the source said. "They don't have any outstanding debt, so it took a while to get done."

The company, based in San Juan, P.R., tapped Banc of America Securities LLC, Citigroup Global Markets and RBS Greenwich Capital as bookrunners.

Verizon prices 10-, 30-year notes

Verizon Communications offered $2.75 billion in two tranches that priced flat to each other, and is using the proceeds to repay commercial paper.

The $1.75 billion of 6.35% 10-year notes priced at Treasuries plus 387.5 basis points, and the $1 billion of 7.35% 30-year notes priced at Treasuries plus 387.5 bps.

Active bookrunners were Banc of America Securities LLC, Barclays Capital Inc. and Credit Suisse Securities.

Staples prices two-year

Office products company Staples priced $500 million of 7.75% two-year notes at par, a source said. They have a spread of Treasuries plus 683.4 bps.

The notes were talked at a coupon, with guidance at 7.875%.

Barclays Capital, Banc of America and HSBC Securities ran the books.

The Farmington, Mass.-based company is using proceeds to repay certain outstanding commercial paper.

World Bank plans issue

The World Bank announced it will price a benchmark-sized issue of three-year global notes this week, a market source said.

A source close to the deal, which is being done off the high-grade corporate syndicate desks, said it will price either Wednesday or Thursday.

The books are open, and Citigroup Global Markets, HSBC Securities, J.P. Morgan Securities Inc. and RBS Greenwich Capital have been tapped as bookrunners.

Time Warner gives terms

Time Warner Cable Inc. released terms Tuesday through an FWP Securities and Exchange Commission filing for its $3 billion deal in two tranches that priced late Monday.

The $1 billion of 7.5% five-year notes priced at Treasuries plus 595 bps, which was within talk for the 600 bps area, a source said.

The $2 billion of 8.25% 10-year notes priced at Treasuries plus 570 bps, after being talked in the 575 bps area.

In both cases guidance was for a spread 12.5 bps either side of talk.

Bookrunners were Banc of America Securities, Citigroup, Deutsche Bank Securities, UBS Investment Bank and Wachovia Capital Markets.

The cable TV provider is based in New York City.

Citi sells FDIC deal

Two units of Citigroup - Citigroup Funding Inc. and Citibank - sold a $7 billion issue of notes backed by the Federal Deposit Insurance Corp. late Monday, with partial terms released Tuesday in FWP SEC filings.

The terms were for two tranches with three-year maturities priced under Citigroup Funding Inc.

The $2.5 billion of three-year floating-rate notes priced at par to yield three-month Libor plus 30 bps. The $1 billion of 2% three-year notes priced at Treasuries plus 86.6 bps.

Citigroup Global Markets was bookrunner for the deal.

Busy pace to continue

The amount of new deals set to price throughout the remainder of the week will be similar to Tuesday, a syndicate source said.

"Yesterday [Monday] was good, and today had a similar tone," he said. "I think the reason we didn't see more today was a lot of people had a lot of money in Time Warner. There were a lot of accounts."

This did not hinder those deals pricing Tuesday, he said, but Monday's flood of new issues decreased what was left on the calendar.

"There are still some things upcoming," a source said, adding "probably not anything big."

Verizon leads new-deal march to secondary

A trader saw Verizon's new 6.35% notes due 2019 hovering around the 387.5 bps over spread at which the New York-based telecommunications company priced its $1.75 billion issue earlier, quoting them at 390 bps bid, 385 bps offered.

He saw the 7.35% bonds due 2039 offered at 383 bps over, with no bid, versus the same 387.5 bps pricing spread.

The new Bacardi bonds came too late in the session for any meaningful aftermarket activity.

Staples's new 7¾% notes due 2011 were seen trading as high as 101.625 bid, 101.875 offered, versus their par issue price.

Time Warner Cable moves up

Among the Monday issues, Time Warner Cable's $1 billion of 7.50% notes due 2014 were seen by a trader having firmed to 573 bps bid, 568 bps offered, from the 595 bps level at which the New York-based cable system operator had priced those bonds.

The trader saw Time Warner Cable's $2 billion of 8.25% notes due 2019 at 544 bps bid, 542 bps offered, well in from the 570 bps level at which the bonds had priced.

A powerful performance from Con Ed

New York-based utility operator Con Edison's $275 million of 5.5% notes due 2014, which priced Monday at 387.5 bps over, had firmed to 372 bps bid, with no offer level.

A trader saw Con Ed's $475 million of 6.65% notes due 2019, which priced at 400 bps over, having tightened to 370 bps bid, with no offer level.

Illinois Tool tightens up

Glenview Ill.-based industrial manufacturer Illinois Tool Works' $800 million of new 5.5% notes due 2014, which priced Monday at 350 bps over, firmed to 340 bps bid, 335 bps offered, while the company's $700 million of 6.25% notes due 2019 were trading at 350 bps bid, 345 bps offered, versus 370 bps at Monday's pricing.

Barrick Gold continues to glitter

Among other recently priced issues, Barrick Gold Corp.'s 6.95% notes due 2019 continued to tighten, with a market source quoting the bonds at 423 bps bid, 16 bps in from its level on Monday, when it was one of the most active issues of the day, with volume of over $75 million. Tuesday's volume of around $50 million also landed the credit on the most-actives list.

The Toronto-based precious metals miner priced $750 million of the bonds at 462.5 bps over last Thursday.

Pfizer still powerful market medicine

Pfizer Inc.'s recent multi-tranche mega-deal continues to trade actively in secondary; in fact, a market source saw two of the new Pfizer bonds right at the top of the actives list as of mid-afternoon, with the 4.45% notes due 2012 in by perhaps 2 bps to the 238 bps level, with over $90 million having changed hands at that point. The bonds were well in from the 305 bps over level at which the New York-based pharmaceutical giant had priced the $3.5 billion issue last Tuesday, as part of its near record-setting $13.5 billion, five-part bond sale.

The source also saw Pfizer's 3.35% notes due 2015 trading at 269 bps bid, about 4 bps tighter on the session and again, well in from the 340 bps over level at which the company priced the $3 billion of bonds as part of that five-part mega-deal. Those bonds too were among the most heavily traded, with over $70 million having changed hands at mid-afternoon.

A third supersized tranche from that behemoth-sized deal, Pfizer's 6.20% notes due 2019, were seen trading about 10 bps wider on the day at 292 bps over, although still well in from the 325 bps over level at which the company had priced the $3.25 billion of bonds last Tuesday. Over $30 billion of the bonds had traded by mid-afternoon.

Marsh & McLennan widens slightly

Marsh & McLennan Cos. Inc.'s recently priced 9.25% notes due 2019 were likewise about 5 bps wider on the day, at just over 600 bps over. However, those bonds were still considerably tighter than the 629.9 bps over spread at which the New York-based global professional services and insurance brokerage firm priced its $400 million of bonds last Wednesday.

Anadarko bonds seen mixed

Back among the more-established issues, Anadarko Petroleum Corp.'s 5.95% notes due 2016 were seen busily traded, with over $20 million changing hands as of mid-afternoon, quoted about 590 bps over, a roughly 30 bps tightening from the spread levels seen on Monday, when the credit was also actively traded, with over $40 million seen changing hands.

The Woodlands, Tex.-based independent oil and gas exploration and development company's floating-rate notes slated to come due on Sept. 15 were meantime quoted at around 225 bps over, having widened out from levels around 200 bps at which they traded late last week.

Financials seen holding their own

Among the financials, a trader said that the sector was "generically a little better. We got a little bit tighter in the course of the day, then we came off the tights, but we're still generically better across the board," even with the fall in banking stocks on renewed fears of greater government control over the industry, sparked by Federal Reserve chairman Ben Bernanke and Treasury secretary Timothy Geithner asking Congress for new regulatory powers.

"We still held up OK."

A market source saw CIT Group Inc.'s 7 5/8% notes due 2012 as one of the day's standout performers, tightening by over 100 bps on the session, as did Wachovia Corp.'s 5.625% notes due 2016, the latter issue coming in to around the 700 bps over mark.

GE gyrations continue

General Electric Capital Corp. remains among the most actively traded issues, with some degree of volatility, a day after Moody's Investors Service cut its bonds and those of its corporate parent, industrial giant General Electric Co., by two notches - a bigger cut than Standard & Poor's recent one-notch downgrade - leaving them at Aa2, down from the former Aaa.

A market source saw GECC's 5.47% notes due 2012 at a spread of around 725 bps over, a 50 bps widening from the levels the bonds were seen at on Monday. Over $25 million of those bonds were seen trading each day.

On the other hand, about an equal number of the GE Capital 5.625% notes due 2018 were traded, quoted at around 480 bps over, in substantially from the levels well north of 500 bps at which the Fairfield, Conn.-based GE financial arm's bonds had traded late last week.

Financial CDS levels seen mixed

With bank stocks down but the bonds mostly firm, a trader who watches the credit-default swaps market saw the cost of protecting holders of big-bank paper against a possible event of default anywhere from 5 bps tighter to 5 bps wider. He meantime saw the CDS costs for investment bank bonds 5 bps tighter to unchanged.

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