GE Capital prices $975 million FDIC deal; Ingersoll-Rand brings $655 million; spreads wider; Pfizer active

By Sheri Kasprzak and Paul A. Harris

New York, March 31 - General Electric Capital Corp. released terms on another FDIC-backed notes sale in Tuesday's session.

A market insider said Tuesday he expects to see a continued interest in the FDIC-guaranteed notes throughout the spring.

"We're seeing spreads tightening just a touch on these notes, so that's the good news," he said. "There are still a lot of issuers who are really interested in the liquidity that these offer."

Also in primary news Tuesday, a subsidiary of Ingersoll-Rand Co. Ltd. priced a $655 million issue of 9½% five-year senior notes (Baa1/BBB+) at 99.992 to yield 9½% that saw strong demand.

In the secondary arena on Tuesday, a market source said the widely followed CDX Series 12 North American high-grade index widened on the day to a mid bid-asked spread level of 196 bps, versus 193 bps on Monday.

Advancing issues widened their lead over decliners, to a not-quite three-to-two ratio.

Overall market activity, reflected in dollar volumes, rose 38% from the levels seen on Monday.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note fell by 5 bps to 2.66%.

The new Ingersoll-Rand bonds were seen having firmed from the levels at which they priced.

There was also activity in the recently priced issues from Sunoco Inc. and Newell Rubbermaid Inc.

And Pfizer Inc.'s recent multi-tranche issue remains among the most actively traded bonds.

GE Capital sells FDIC floaters

GE Capital's deal was $975 million in FDIC-guaranteed senior notes, according to a form 8-K filed Tuesday with the Securities and Exchange Commission.

The three-year notes (Aaa/AAA/) priced at par to yield three-month Libor plus 22 basis points on Friday.

Banc of America Securities LLC and Morgan Stanley & Co. Inc. were the joint bookrunners.

Ingersoll sells $655 million

Finance unit Ingersoll-Rand Global Holding Co. Ltd. priced $655 million of 9½% five-year senior notes (Baa1/BBB+) at 99.992 to yield 9½%, according to an informed source.

The notes priced at the tight end of the 9½% to 9 5/8% price talk and were upsized slightly from the original $650 million amount.

The order book was multiple-times oversubscribed, according to an asset manager who participated.

Credit Suisse, Goldman Sachs & Co. and JP Morgan were joint bookrunners.

Proceeds will be used to address near-term liquidity needs.

The issuer is a Piscataway N.J.-based climate control systems manufacturer.

The deal was multiple times oversubscribed, according to an asset manager from a mutual fund.

"It was priced at an extreme discount to where the existing bonds were quoted," said the asset manager whose portfolio includes high-grade bonds, high-yield bonds and stock.

"That's because the company has a lot of liquidity needs that need to be met," the investor explained.

"They have a lot of commercial paper outstanding. They have a bond put. And they have a lot of maturities to address."

In addition to the bonds, the company announced it would do $300 million of convertible bonds due 2012 and a $200 million one-year trade receivables financing agreement.

The proceeds will primarily be used to repay a bridge loan set to mature in June 2009 incurred in connection with its June 2008 acquisition of Trane.

"Business has been really soft, also," the investor added, noting that the company announced its first quarter sales declined by 27%.

Priced to move

Initial guidance on the Ingersoll-Rand notes due 2014 came out in the high-nines to the low-10s, the investor said.

Later formal price talk of 9½% to 9 5/8% was heard - and the deal priced at the rich end of that talk.

"It was priced to move," the investor remarked, "even at the richer terms."

Deals in the high-grade market have all been priced to move, the asset manager stated.

"When you have something that's investment grade paying close to 10%, even if its business is weak, that puts you in high single-B/low double-B terrain.

"There is a tremendous appetite for higher-yielding paper, especially if it's investment grade," the asset manager said.

Black & Decker upsizes

Also in the Tuesday high-grade market Black & Decker Corp. priced an upsized $350 million issue of 8.95% five-year senior notes (Baa3/BBB/BBB) at 98.807 to yield 9¼%.

Like Ingersoll-Rand, it was talked at a yield, 9¼%, instead of coming with the more accustomed spread talk. It was increased from a planned $250 million.

First Merchants' pooled sale

Elsewhere in Tuesday's pricing action, banking subsidiaries of First Merchants Corp. sold $79 million in 2.625% FDIC-backed senior notes, said a form 8-K filed Tuesday with the Securities and Exchange Commission.

The notes have a three-year term.

The subsidiaries that sold the notes included First Merchants Bank, Lafayette Bank and Trust Co., Commerce National Bank and Lincoln Bank.

New bonds edge up

When the new Black & Decker 8.95% notes due 2014 were freed for secondary dealings, a trader saw the issue at 99.75 bid, up from the 98.807 level at which the Towson, Md.-based power tool manufacturer had priced its $350 million of new bonds, upsized from $250 million originally.

A trader saw Ingersoll-Rand's 9½% notes due 2014 trade up to 101.5 bid - well up from the 99.992 level at which the Hamilton, Bermuda-based industrial machinery maker's $655 million of the bonds priced.

Sunoco steps back

A trader said that Sunoco's 9.625% notes due 2015 were trading at a dollar-price level of 102.25 bid. That was down from the peak level around 104.88 to which the bonds had moved up on Monday.

However, the bonds remained well above the 99.429 at which the Philadelphia-based energy refining and marketing company had priced the $250 million of bonds last Thursday.

Newell holds gain

The recently priced Newell Rubbermaid Inc. 10.60% notes due 2019 were seen by a trader continuing to hold the gains that the bonds had notched in late trading last week.

He saw the issue at 100.5 bid, 101.5 offered -- not much changed from Monday's 100.5 bid, 100.75, but still well above the 97.592 level at which the Atlanta-based consumer products company priced its $300 million issue last Thursday.

Pfizer still actively dealt

Going back a little further, New York-based drugmaker Pfizer's multi-tranche mega-deal continued to trade actively in Tuesday's secondary market.

A market source saw its 6.20% notes due 2019 as the most active issue, with over $66 million trading at 266 bps over, some 15 bps over Monday's levels but still well in from the 325 bps over level at which the company had priced the $3.25 billion of bonds on March 17 as part of its near-record-setting $13.5 billion, five-part bond sale.

Pfizer's 4.45% notes due 2012 were quoted at 220 bps over - out from the 200 bps over area at which they had wrapped up last week, but still in solidly from the 305 bps over level at which the company had priced the $3.5 billion issue on March 17. Over $55 million changed hands on Tuesday.

Another actively traded Pfizer credit was the 7.20% bonds due 2039, quoted trading at about 300 bps over, about 10 bps in on the session, as well as considerably tighter than the 345 bps over at which the $2.5 billion of bonds priced as part of that gigantic offering. Over $46 million of the bonds had traded on Tuesday.

Financials seen lower

Among the financial issuers, a trader called the group "a little weaker, banks particularly, while GE [Capital Corp.] was a little weaker as well."

It was "a relatively quiet day" in the sector, he said, with no new issuance - "there never really is," he pointed out, noting that except for one or two issues over the past few months, that vast majority of financial new issuance has been under the FDIC-backed Temporary Liquidity Guarantee Program, which prices off the agency desks at most banks and trades in that market, rather than the straight corporates market.

He called it a "relatively quiet day, but on the whole weaker."

For instance, he saw JP Morgan Chase & Co.'s 6% notes due 2018 having widened to 345 bps over, versus levels of 335 bps bid, 325 bps offered on Monday.

Lincoln National gyrates around

He saw Lincoln National Corp.'s bonds as having "been beat up" on investor worries about the Radnor, Pa.-based insurer, with some of the bonds trading as low as the 20s, though in small pieces. He chalked it up to "people are throwing out low bids, trying to pick some people off," although he added that it seems like the credit now "has found a little bit of footing."

Still, he opined, "it would be a very hard name to trade."

That was mirrored in the behavior of its New York Stock Exchange-traded shares, which had swooned by 38% on Monday after the company withdrew an application to issue debt under the TLGP program, saying it didn't meet the FDIC's criteria, but which then partially bounced back Tuesday after Lincoln calmed market liquidity fears by announcing that it will pay a $500 million debt maturity in full and on time on April 6 using internal cash resources. It will also use internal cash, as well as new commercial paper, to cover the payment of a $375 million CP debt maturity due in May.

Financial CDS levels seen wider

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 unchanged to 5 bps wider, and saw CDS costs for investment-bank bonds unchanged to 10 bps wider.

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