Philip Morris, Wells Fargo, Deutsche Bank, Vornado price new issues; new bonds trade improved

By Andrea Heisinger

New York, March 23 - Activity ramped up in the investment-grade market on Tuesday as deals were priced by Philip Morris International Inc., Northwestern Mutual Life Insurance Co., Wells Fargo & Co., Deutsche Bank AG, London Branch, Eksportfinans ASA, Thomson Reuters Corp., Vornado Realty LP and Endurance Specialty Holdings Ltd.

This was in stark contrast to the start of the week, which saw three small sales price. Nearly all the deals that were sold on Tuesday totaled more than $1 billion.

Deutsche Bank was one of the first to price its deal, selling $1.5 billion of five-year notes through its London branch.

Tobacco company Philip Morris International priced $1 billion of 10-year notes soon after. Its parent company, Altria Group Inc., saw some of its bonds among the most active before the Philip Morris notes were priced.

Vornado Realty sold $500 million of five-year notes.

Thomson Reuters also priced $500 million of notes but in a 30-year maturity. They were sold tighter than price guidance.

Wells Fargo priced a similar deal to Deutsche Bank with its $1.25 billion offering of five-year notes.

Later in the afternoon, Northwestern Mutual priced $1.75 billion of 30-year surplus bonds.

Eksportfinans priced $1 billion of three-year notes at the same level as guidance.

Insurance and reinsurance company Endurance Specialty announced it had reopened its 7% notes due 2034 to add $85 million. The original bonds were priced in 2004.

Most of the day's sales were oversubscribed and priced tight to talk, a syndicate source said.

"Everything performed really well," he said.

Not all of the day's sales were better once freed for the secondary market, traders said.

Volume was up slightly from the previous day, but some bonds struggled to find footing in trading.

The new Vornado bonds were offered tighter, while the new Thomson Reuters 30-year bonds hovered around where they priced.

Philip Morris' new 10-year note was improved. Two new financial notes from Wells Fargo and Deutsche Bank were mixed once hitting the secondary.

Monday's tranches from Florida Power Corp., which does business as Progress Energy Florida Inc., were quoted at the same levels they were trading at after pricing, a source said.

One trader, who was "not sure what's happening with health-care" bonds, said that overall the secondary spreads seemed to tighten by 1 to 2 basis points.

Wells Fargo taps market for $1.25 billion

San Francisco-based Wells Fargo sold $1.25 billion of 3.625% five-year notes (A1/AA-/AA-) by late afternoon to yield 123 bps over Treasuries, a source close to the sale said.

Price guidance was whispered in the low 130 bps area, the source said. It was later revised to the 125 bps area, with a margin of plus or minus 2 bps. It priced at the tight end of that talk.

There was about $5 billion in demand for the deal.

Wells Fargo Securities was the bookrunner for the banking and financial services company.

Thomson Reuters prices tight to talk

Thomson Reuters priced $500 million of 5.85% 30-year bonds (Baa1/A-/A-) to yield 137.5 bps over Treasuries, a market source said.

This was at the tight end of guidance in the 140 bps area, the source said.

J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc., RBS Securities Inc. and UBS Investment Bank were the bookrunners.

Proceeds are being used to partially fund a $700 million tender offer for the company's 6.2% notes due January 2012 and the subsequent redemption of remaining notes in April.

The information and media company is based in New York.

Deutsche Bank sells $1.5 billion

Deutsche Bank sold $1.5 billion of 3.45% five-year notes (Aa3/A+/AA-) through its London branch at Treasuries plus 110 bps, an informed source said.

Deutsche Bank Securities Inc. was the bookrunner.

The financial services company is based in Frankfurt.

Corporate primary sees $7.5 billion

An influx of new bonds in nearly every sector hit the investment-grade corporate market, with more pricing in the high-yield and emerging-markets spaces.

"We're going to see more like this," a source said. "They should keep coming."

Spreads remained low, with most deals pricing at the tight end of guidance. This should keep the market busy for the next day or two, the source said.

"There's definitely more coming," another source said between calls for upcoming sales.

Wednesday at least is expected to be busy, the source said, with several deals lined up.

Investors still want to buy "high-grade bonds with low prices," the source said.

Philip Morris offers 10-year notes

Philip Morris International offered $1 billion of 4.5% 10-year senior unsecured notes (A2/A/A) at 98 bps over Treasuries, a source close to the sale said.

Citigroup Global Markets Inc., Goldman, Sachs & Co. and JPMorgan ran the books.

Proceeds will be used for working capital, to repurchase common stock, to refinance debt and for general corporate purposes.

The tobacco company is based in New York.

Vornado prices $500 million

Vornado Realty sold $500 million of 4.25% five-year unsecured notes (Baa2/BBB/BBB) to yield Treasuries plus 187.5 bps.

They priced in line with guidance in the 187.5 bps area, the source said.

The bookrunners were Bank of America Merrill Lynch, Citigroup, JPMorgan and UBS Investment Bank.

Proceeds are being used for general corporate purposes, including the repayment or repurchase of debt or acquisitions.

The operating partnership for real estate investment trust Vornado Realty Trust is based in New York.

Eksportfinans offers $1 billion

Norway's export credit agency Eksportfinans priced a benchmark $1 billion of 1.875% three-year global notes (A1/AA/AA) to yield 46.25 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

They were talked at mid-swaps plus 25 bps in late morning, which is in line with pricing.

The bookrunners were Bank of America Merrill Lynch, Citigroup and JPMorgan.

The issuer is based in Oslo.

Northwestern Mutual sells surplus bonds

Northwestern Mutual Life Insurance sold $1.75 billion of 6.063% 30-year surplus notes (Aa2/AA) to yield 145 bps over Treasuries, a source said.

The bookrunners were Bank of America Merrill Lynch, Goldman Sachs and JPMorgan.

The insurance and financial services company is based in Milwaukee.

Endurance Specialty reopens

Endurance Specialty Holdings reopened its issue of 7% senior unsecured notes due 2034 (Baa1/BBB+) to add $85 million, according to a press release from the company.

Total issuance is $335 million including $250 million of notes issued on July 15, 2004.

The full terms of the reopening were not available at press time.

Bank of America Merrill Lynch ran the books.

Proceeds are being used for general corporate purposes.

The property and casualty insurance and reinsurance company is based in Pembroke, Bermuda.

Deutsche Bank bond widens, recovers

The 3.45% bonds due 2015 from Deutsche Bank lost some ground in trading but gained it back.

The bonds priced at 110 bps over Treasuries and were at first quoted slightly wider at 114 bps bid, 110 bps offered. Later they were at 110 bps bid, 106 bps offered, a trader said.

"It didn't have as much room to run," a source said, comparing the performance to the five-year note priced by Wells Fargo that was tighter in trading.

Wells Fargo trades improved

Wells Fargo priced a 3.625% note due 2015 by mid-afternoon, and it was seen tighter than its price of Treasuries plus 123 bps almost immediately, a trader said.

The note was first quoted at 118 bps bid and later at 119 bps bid, 115 bps offered. A little later it was quoted even tighter at a bid of 116 bps and offer of 110 bps.

Vornado Realty moves tighter

Vornado Realty's 4.25% note due 2015 was offered tighter after being released to trade, a source said.

The bond sold at 187.5 bps over Treasuries and was quoted at an offer of 177 bps.

Thomson Reuters seen unchanged

Soon after pricing, the new 5.85% bond due 2040 from Thomson Reuters was trading at about the same level as where it priced.

It sold at 137.5 bps over Treasuries and was offered at 136 bps, a trader said.

Philip Morris trades 5 bps better

Philip Morris International sold a 4.5% note due 2020, and it was seen tighter than its Treasuries plus 98 bps price soon after.

A trader quoted it at a bid of 93 bps and offer of 91 bps.

Florida Power notes trade stagnant

Two bonds priced on Monday by Florida Power d/b/a Progress Energy were mostly unchanged from where they were quoted after pricing, a source said.

The 4.55% note due 2020 was priced at 90 bps over Treasuries and was offered at 87 bps late Tuesday.

A tranche of 5.65% bonds due 2040 from the same offering were quoted at an offer of 109 bps, which is in only slightly from the price of 110 bps over Treasuries.

Altria, financials among most-traded

Two bonds from tobacco company Altria Group were among the issues seeing the most trading activity early in the afternoon, a source said.

They were surrounded by recently priced bonds from financials Goldman Sachs Group, Inc. and Royal Bank of Scotland plc, which have remained popular with investors since being reopened and priced, respectively.

The Goldman Sachs bonds were trading at 153 bps, which is about the same level they were actively changing hands at on Monday. This is tighter than the 175 bps over Treasuries price from March 19.

Altria Group's 8.5% note due 2013 and 9.25% note due 2019 were among the most-traded deals of the day. It was likely due to the new 10-year bond priced by subsidiary Philip Morris International, which is a spinoff created after the buyout of Philip Morris USA.

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