Summer lull is over with more than $8 billion in new investment grade issues pricing

By Andrea Heisinger

Omaha, Sept. 6 - More new issues poured into the investment-grade market Thursday, totaling more than $8 billion, and traders said it is the end of the summer slowdown.

Among the issuers were Bank of America Corp., Virginia Electric & Power Co., Duke Realty Limited Partnership, Starwood Hotels & Resorts Worldwide Inc., Lowe's Cos., Inc., Texas Eastern Transmission Co., Wells Fargo & Co., Pitney Bowes Inc., American Express Credit Corp., and Barclays Bank plc.

Lowe's priced $1.3 billion of notes in three tranches, sources said, upsized from $1 billion. The $550 million tranche of five-year notes priced at a spread of 143 basis points to Treasury, while a $250 million tranche of 10-year notes priced at 160 bps to Treasury.

The third tranche of $500 million in 30-year notes priced at a spread of 188 bps to Treasury.

Full terms were not available at press time. J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Wachovia Capital Markets LLC were bookrunners.

BofA leads bank sales

The largest of several bank issues Thursday was from Bank of America with $1.7 billion in three tranches. The first tranche was $550 million of five-year three-month Libor plus 50 bps floaters that priced at par.

The second tranche was $650 million in five-year 5.375% global notes that priced at a spread of Treasuries plus 123 bps with a price of 99.753. A final $500 million tranche of 30-year 6.5% global notes priced at a spread of Treasuries plus 175 bps with a price of 99.424.

Barclays priced $2.05 billion in five-year 5.45% senior unsecured notes at a spread of 130 bps with a price of 99.814 and yield of 5.493%.

Virginia Electric sells $600 million

Virginia Electric had $600 million in 10-year 5.95% senior notes that priced at a spread of Treasuries plus 150 bps with a price of 99.612 and yield of 6.002%.

And Duke Realty priced $300 million in 6.5% senior notes due 2018 at a spread of 205 bps over the 10-year Treasury with a price of 99.64 and yield of 6.55%.

Starwood Hotels & Resorts issued $400 million in 6.25% senior notes due 2013 at a spread of Treasuries plus 207 bps with a price of 99.888 and yield of 6.276%.

Energy company Texas Eastern priced $400 million in 10-year 6% notes at a spread of Treasuries plus 155 bps with a price of 99.598 and a yield of 6.054%.

More bank issues came from Wells Fargo & Co. with $250 million in 5.3% senior unsecured notes due 2011 priced at a spread of 110 bps with a price of 100.078 and yield of 5.277%. American Express Credit Corp. also came to the table with $500 million in two-year floating-rate notes.

And Pitney Bowes priced $500 million in 10-year 5.75% medium-term notes upsized from $250 million. The notes priced at a spread of Treasuries plus 140 bps with a price of 98.803 and yield of 5.91%.

AstraZeneca edges tighter

Wednesday's largest issue from AstraZeneca plc was doing well in trading Thursday, market sources said.

The $1.75 billion tranche of 10-year notes that priced at Treasuries plus 145 bps was trading at 144 bps, while the $2.75 billion tranche of 30-year notes priced at Treasuries plus 170 bps was trading at 166 bps, sources said.

"A lot of the recent new issues are tighter from the new issue bid," one market source said.

"Overall it's a fine tone today in the market and it's pretty stable."

The credit market was mixed Thursday, while stocks were up, a source said. A boost from retail has helped in the last couple of days.

Although the end of the week has recently been quiet, and end to the summer lull could also mean an end to that trend.

"It should be pretty quiet tomorrow, but you never know," a trader said.

"There will definitely be a deal or two."

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