Plains All American, People's United sell in 'constructive' market; Carnival, Rubbermaid firm

By Aleesia Forni and Andrea Heisinger

New York, Dec. 3 - The previous frantic pace of the high-grade bond market slowed on Monday as a modest slate of sales were priced.

A $750 million offering of 10-year notes and 30-year bonds came jointly from Plains All American Pipeline, LP and PAA Finance Corp. The size of the trade was increased from $500 million, a source said.

Charles Schwab Corp. priced $350 million of three-year notes for general corporate purposes.

A $500 million sale of 10-year senior notes was priced at People's United Financial, Inc. The size was increased from $300 million.

El Paso Electric Co. sold $150 million of 10-year senior notes.

The market's tone was solid, one source said, although equities ended the day down on some economic data.

There was also news on Monday that president Barack Obama had rejected the Republicans' plan for avoiding the end-of-year fiscal cliff, but that did not immediately affect bonds, a source said.

"It was business as usual today," he said. "We should have more volume tomorrow."

Another source who worked on the Plains deal said that it was a "pretty constructive day" and that most of the day's sales had "pretty heavy order books."

There was more leverage than the previous week, when many of the sales priced in line with guidance, he added.

Tuesday is expected to be more active with several offerings already in the works, sources said.

The Markit CDX Series 18 North American Investment Grade index was 2 basis points wider at a spread of 100 bps on Monday.

Shell International Finance BV's recent notes were mixed in trading. The notes due 2015 were quoted 2 bps wider, while the notes due 2023 were trading 5 bps better.

In other recent deals, Newell Rubbermaid Inc.'s 2.05% five-year notes were 8 bps tighter on Monday.

Carnival Corp.'s notes were also trading better during the session.

The secondary saw Bank of America's 7.375% notes due 2014 weaken 1 bp.

Meanwhile, other bank paper from Merrill Lynch due 2018 and Bank of Nova Scotia due 2015 firmed during the day's trading.

Investment-grade bank and brokerage credit default swaps costs declined on Monday.

Bank of America's CDS costs tightened 1 bp to 143 bps bid, 148 bps offered. Citi's CDS costs were 2 bps tighter at 133 bps bid, 138 bps offered. J.P. Morgan's CDS costs declined 1 bp to 94 bps bid, 99 bps offered. Wells Fargo's CDS costs were unchanged at 80 bps bid, 85 bps offered.

Merrill Lynch's CDS costs were 2 bps tighter at 138 bps bid, 148 bps offered. Morgan Stanley's CDS costs declined 1 bp to 209 bps bid, 214 bps offered. Goldman Sachs' CDS costs were 3 bps tighter at 162 bps bid, 167 bps offered.

Plains All American upsizes

Plains All American Pipeline and PAA Finance jointly tapped the market for an upsized $750 million of senior notes (Baa2/BBB/) in two tranches, a market source said.

The size was increased from $500 million. The upsizing was due to the about $5 billion of demand on the books, the source said.

"We had about $6 billion at the top, but then there were some drops."

Those investor drops were due to the 20 bps to 25 bps tightening of the notes' spreads from guidance.

The $400 million of 2.85% notes due 2023 were sold at a spread of Treasuries plus 125 bps.

A $350 million tranche of 4.3% bonds due 2043 were priced at 150 bps over Treasuries.

Each of the tranches came in sharply from price talk, the market source said. The 10-year notes were talked 25 bps wider in the 150 bps area while the 30-year bonds had guidance 20 bps wider in the 170 bps area.

Bookrunners were Wells Fargo Securities LLC, Barclays, Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc. and UBS Securities LLC.

Proceeds are being used to repay outstanding borrowings under a credit facility and for general partnership purposes.

Plains All American was last in the market with a $1.25 billion sale of notes in two parts on March 13. The 3.65% 10-year notes from that offering sold at 160 basis points over Treasuries while a 5.15% 30-year bond priced at 195 bps over Treasuries.

The oil and natural gas transportation, production and storage company is based Houston.

Schwab's $350 million trade

Charles Schwab sold $350 million of 0.85% three-year senior notes (A2/A/A) at 52 bps over Treasuries, an informed source said.

The trade was done at the tight end of price talk in the 55 bps area, the source said. There was roughly $1.5 billion in demand on the books.

Bookrunners were Citigroup Global Markets Inc. and Goldman Sachs & Co.

Proceeds are being used for general corporate purposes.

Schwab was last in the straight bond market with a $100 million reopening of 4.45% notes due 2020 on Aug. 5, 2010.

The brokerage, banking and financial services company is based in San Francisco.

People's United taps market

People's United Financial was in the market with an upsized $500 million sale of 3.65% 10-year senior notes (A3/BBB+/A-) priced at Treasuries plus 207 bps, according to an FWP with the Securities and Exchange Commission.

J.P. Morgan Securities LLC was bookrunner.

The bank and financial services company is based in Bridgeport, Conn.

El Paso Electric's 10-years

El Paso Electric sold $150 million of 3.3% 10-year senior notes (Baa2/BBB/) to yield Treasuries plus 170 bps, according to an FWP with the Securities and Exchange Commission.

J.P. Morgan Securities LLC and Mitsubishi UFJ Securities (USA) Inc. were bookrunners.

Proceeds are being used for general corporate purposes including funding capital expenditures and to repay short-term borrowings under a credit facility.

El Paso Electric last tapped the bond market with a $150 million sale of 7.5% 30-year bonds priced at 280 basis points over Treasuries on May 29, 2008.

The electric utility is based in El Paso, Texas.

Shell bonds mixed

A trader quoted Shell's 0.625% notes due 2015 at 32 bps bid, 30 bps offered on Monday. The notes sold at Treasuries plus 30 bps on Thursday.

The 2.25% notes due 2023 were trading at 70 bps bid, 68 bps offered. The notes priced at a spread of Treasuries plus 75 bps.

The Hague, the Netherlands-based oil and gas company sold each of the bonds as part of a $1.75 billion offering.

Rubbermaid firms

Newell Rubbermaid's $350 million of 2.05% five-year notes was quoted 8 bps better at 137 bps bid, 133 bps offered, a trader said.

The notes priced on Thursday to yield 145 basis points over Treasuries.

The consumer and commercial products maker is based in Atlanta.

Carnival trades better

The $500 million 1.875% five-year notes from Carnival Corp. were trading 12 bps better at 118 bps bid, 116 bps offered.

The London-based cruise company sold the notes on Thursday at a spread of 130 bps over Treasuries.

Bank Nova firms

Also in the secondary, Bank of Nova Scotia's 1.85% notes due 2015 tightened 1 bp on Monday to 29 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January.

Merrill Lynch tightens

The secondary saw Merrill Lynch's 6.875% notes due 2018 tighten 3 bps to 221 bps bid near the end of New York's session.

On April 22, 2008, the bank priced $5.5 billion ten-year notes at 320 bps over Treasuries.

Bank of America widens

In other trading, Bank of America's 7.375% notes due 2014 widened 1 bp to 110 bps bid.

The bank priced $3 billion notes due 2014 at Treasuries plus 537.5 bps on May 8, 2009.

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