Mattel, Praxair, Cigna, Pitney Bowes, JPMorgan issue; bank spreads widen 30 bps on Fed comments

By Andrea Heisinger and Paul Deckelman

Omaha, March 4 - New issuance picked up Tuesday, with Mattel, Inc., Praxair, Inc., Cigna Corp., Pitney Bowes Inc., Toyota Motor Credit Corp. and JPMorgan Chase & Co. all pricing offerings.

Other upcoming issues for the week were also announced.

In the investment-grade secondary market Tuesday, declining issues led advancers by about a 6.5-to-five margin, while overall market activity, reflected in dollar volumes, rose by 5% from Monday's Friday's levels.

Traders saw little price movement in new bonds like Mattel and Praxair, which priced earlier in the session, or in the new Kellogg Co. bonds that priced Monday.

Among more established names, Citigroup's bonds were seen wider amid new investor concerns about the loss-plagued banking giant.

Sprint Nextel Corp.'s nominally investment-grade bonds remain actively traded, though mostly at quite distressed levels.

Mattel prices, Praxair sees 'attractive financing'

Mattel priced $350 million of 5.625% five-year notes at 99.795 with a spread of Treasuries plus 325 bps.

Banc of America Securities LLC and RBS Greenwich Capital ran the books.

Praxair priced $500 million of 4.625% notes due 2015 at 99.859 to yield 4.648% with a spread of Treasuries plus 165 bps.

This was wider than price talk whispers of 160 bps, a source close to the deal said.

"With Treasury bonds nearing five-year lows and overall costs below 5%, this is an attractive financing opportunity," Michael J. Allen, Praxair's vice president and treasurer, commented in a press release

A market source said the issue went quickly.

"It's a good name and it's rated well," he said. "It was well oversubscribed."

Bookrunners were Credit Suisse Securities LLC, Deutsche Bank Securities Inc. and HSBC Securities.

Cigna upsizes

Health care company Cigna priced an upsized $300 million 6.35% 10-year notes at 99.888 to yield 6.365% with a spread of Treasuries plus 275 bps.

This was in line with price talk of 275 bps, a source close to the issue said.

The size was increased from $250 million.

Bookrunners were Banc of America and Goldman Sachs & Co.

Pitney Bowes matches talk

Pitney Bowes priced $250 million 10-year notes at Treasuries plus 215 bps, market sources said.

This was in line with price talk of 215 bps area.

Full terms for the issue were not available at press time.

Deutsche Bank and J.P. Morgan Securities Inc. were bookrunners.

Toyota active

Toyota Motor Credit priced two separate issues Tuesday.

The financing company issued $150 million medium-term floating-rate notes due Sept. 2009 at par to yield Federal Funds plus 43 bps.

They also issued $150 million medium-term floaters due Oct. 2009 at par to yield Federal Funds plus 43 bps.

Agent for both was Citigroup Global Markets Inc.

JPMorgan adds $25 million

JPMorgan Chase reopened Monday's issue of two-year floaters to add $25 million.

Total issuance is now $1.125 billion, including the $1.1 billion priced Monday.

The notes came at par to yield three-month Libor plus 49 bps.

Agent was J.P. Morgan.

Wells Fargo to sell trust preferreds

An upcoming issue from Wells Fargo Capital XII was announced

The financing arm of Wells Fargo & Co. plans to price enhanced trust preferred securities at $25 each.

The issue will likely come to the market Wednesday, a source close to the issue said.

Citigroup, Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co. Inc. are bookrunners.

Packaging Corp. bringing deal

An issue from Packaging Corp. of America was announced Tuesday, but reportedly did not price.

Sources close to the deal said they could not comment.

The company announced an issue of 10-year senior notes.

Bookrunners are Deutsche Bank and J.P. Morgan.

Proceeds are to be used to repay senior notes due 2008, and prior to that, to invest in a short-term interest-bearing obligation.

Philips to sell three-piece deal

Royal Philips Electronics plans to issue a three-tranche issue of notes this week, market sources said.

The issue of five, 10 and 30-year notes will likely price Wednesday, a source said.

Bookrunners are Citigroup and J.P. Morgan.

Mixed views on tone

Opinions varied Tuesday on the condition of the investment-grade bond market.

At midday, one source said that the tone was far better in the bond market than in the stock market, and issuers and investors were adjusting to the damage negative headlines were causing.

"People can live with the extra spread," the source said. "The 10-year [Treasury] is at 350 [bps] now, and it was way wider a couple of months ago. It picked up 80 bps."

Another source later in the day said the tone was initially negative for the day and didn't get any better.

A warning from Federal Reserve chairman Ben Bernanke about further housing weakness weighed down the day and forced spreads wider. Comments from Dallas Federal Reserve president Richard Fisher also hurt the bond market.

"It was pretty bleak," the source said.

Bank spreads went 30 bps wider on these comments, which in the past was pretty much unheard of, he said.

This negativity could slow issuance Wednesday.

"I would be surprised if we saw as many deals as we did today," a source said. "It's becoming more a question of level by issuers. They may start to reevaluate timing and decide if they really need to do an issue."

Overall, things could become worse in the coming weeks, a source said.

"I wouldn't be surprised if we see things slow, if not shut down completely in the future," he said.

New issues trade near pricing spreads

A trader said that the new Mattel 5.625% notes due 2013, which had priced at a spread over Treasuries of 325 bps, hung in around that level when they hit the aftermarket, at 325 bps bid, 320 bps offered.

Another trader saw the bonds slightly firmer at 323 bps bid, 320 bps offered.

The first trader also saw the new Praxair 4.625% notes due 2015 at 164 bps bid, 159 bps offered, little changed from 165 bps at their pricing.

The new Kellogg 4.25% notes due 2013 were trading around 180 bps bid, 178 bps offered, not far from the 180 bps spread the bonds had when they priced on Monday.

Among the more established issues, Kellogg's 6.6% notes due 2011 were quoted at 142 bps a 10 bps tightening.

Citigroup bonds widen a little

Citigroup's bonds were seen generally 4 bps to 10 bps wider amid concerns that the banking giant might have to take additional huge writedowns related to the credit crunch and statements by investors in Abu Dhabi to the effect that further cash infusion from the sovereign funds might be needed.

Citi's 6.875% bonds due 2038 were seen having widened slightly to around the 266 bps level, out about 4 bps from late Monday, while its 6% notes due 2017 were spied about 10 bps wider at 230 bps.

Another market source saw the 6.875% paper at 275 bps over, while its 3.625% notes due 2009 were seen at 316 bps.

Activity continues in Sprint Nextel

Overland Park, Kan.-based Sprint Nextel's bonds continued to trade actively on Tuesday.

That paper has been badly battered since the Number 3 U.S. Wireless carrier said last week that it had lost nearly $30 billion in the most recent quarter and had been forced to draw a sizable chunk of its revolving credit facility availability. Fitch Ratings downgraded it to junk status, while S&P put it under review for a possible similar downgrade and Moody's lowered its outlook on the company to negative. Both junk and high-grade traders are quoting it in dollar-price terms rather than on a spread-versus Treasuries basis.

A junk trader noted that in 2000 and 2001, when "the internet [dot-com] bubble burst, things got really choppy and sloppy. Sprint came our way then, and its coming back our way again [now]." He saw the Sprint bonds "softer by about ½ point on the day. Sprint Capital Corp.'s 6.90% notes due 2019 were seen at 78.25 bid, while Sprint Nextel's 6% notes due 2016 settled in around 74.

A market source saw Sprint's 6.875% bonds due 2028 off ½ point in busy trading to end at 71 bid. Sprint Capital's 8.75% bonds due 2032 lost a full point to end at 78.

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