PNC brings $1 billion in FDIC-backed bonds; Ingersoll-Rand plans benchmark; spreads wider

By Sheri Kasprzak

New York, March 30 - The primary market kicked off the week with another large FDIC-backed note sale, this one $1 billion from PNC Financial Services Group Inc.

Meanwhile JPMorgan Chase & Co. released terms on a $400 million FDIC-backed add on priced Friday that brought its recent issue of floaters to $2.5 billion.

A market insider said Monday that upcoming offerings look fairly healthy and that the market should be seeing more FDIC-backed notes in the weeks ahead.

"There's a good appetite for the FDIC notes," he said.

"We've had a load of them the past few weeks, and I imagine there will be more in the coming weeks."

Meanwhile, a benchmark-sized industrial deal is planned by Ingersoll-Rand Co. Ltd.

In the secondary sphere on Monday, a market source said the widely followed CDX Series 12 North American high-grade index widened sharply on the day to a mid bid-asked spread level of 193 bps, versus 183 bps on Friday.

Advancing issues, though, remained narrowly ahead of decliners.

Overall market activity, reflected in dollar volumes, fell 18% from the levels seen on Friday.

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 2.71%.

With little in the way of new deals, outside of the re-opened FDIC floater issues, secondary activity Monday was largely focused on last week's deals, as well as other recent offerings such as Pfizer Inc.'s, which remain actively traded.

Banking paper was seen mostly lower as, as the sectors shares slid on renewed fears that many of the big banks - even after having received billions of dollars in government bailout money, will still require many additional billions, a prospect raised by Treasury secretary Timothy Geithner in a weekend TV interview.

PNC's FDIC notes

PNC's FDIC-backed floating-rate senior notes (Aaa/AAA/AAA) have a two-year term and were priced at par to yield three-month Libor plus 20 basis points.

The co-bookrunners Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

The two-year JPMorgan notes have a coupon of Libor plus 13 bps were priced at par to yield Libor plus 12.809 bps.

J.P. Morgan Securities Inc. was the bookrunner.

Ingersoll deal ahead

Moving to upcoming sales, the Ingersoll Rand is expected to bring to market a note sale as part of $1 billion of financing.

Credit Suisse, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are joint bookrunners for the offering.

The note sale is part of a series of financings intended to raise $1 billion. Proceeds will be used by Ingersoll-Rand to "strengthen its financial flexibility and enhance its credit profile."

Ingersoll-Rand is also pricing $300 million of exchangeable notes and expanding its 364-day trade receivables financing facility to provide an additional $200 million of financing.

"We are confident these coordinated actions will address our anticipated financing needs through the end of 2010 and will fortify the groundwork for an even stronger future," said Herbert Henkel, the company's chief executive officer and chairman, in a statement.

Headquartered in Hamilton, Bermuda, Ingersoll Rand is a industrial products company.

Sunoco shines

In the secondary market, a source said that Sunoco Inc.'s 9.625% notes due 2015 were trading at a spread versus comparable Treasury issues of 662 basis points - well in from the 800.3 bps level at which the Philadelphia-based petroleum refining and marketing company priced its $250 million of bonds last Thursday.

On a dollar-price basis, the bonds had moved up almost to the 105 level from the 99.429 at which they priced.

Sunoco was one of the most actively traded bonds on Monday, with over $35 million having changed hands by mid-afternoon.

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, 100.75 offered, not much changed from the levels at which they traded on Friday. However, that was well above the 97.592 level at which the Atlanta-based consumer products company priced its $300 million issue last Thursday.

Deere remains tighter

The trader said that the recent John Deere Capital Corp. 5.25% notes due 2012 were trading at 384 bps bid, 380 bps offered, about unchanged from where they had ended up at the close of last week's activity.

However, it was still well in from the 400 bps over level at which the financing arm of the Moline, Ill.-based tractor manufacturer priced its $750 million issue on Wednesday.

Idaho Power bonds little changed

Another deal from last Wednesday, Idaho Power Co.'s $100 million offering of 6.15% notes due 2019, were still being quoted at 340 bps over, with no offered levels seen - unchanged from where they were quoted last week.

The utility priced that deal at 340 bps over.

Pfizer still well-traded

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

A market source saw its 5.35% notes due 2015 at 244 bps over, about 5 bps tighter from where they had ended up last week, and well in from the 340 bps over level at which the company priced the $3 billion of bonds on March 17 as part of its near-record-setting $13.5 billion, five-part bond sale.

About $55 million of the bonds changed hands, making it one of the day's most active issues.

Another active Pfizer credit was the 7.20% bonds due 2039, quoted trading at about 310 bps over, considerably tighter than the 345 bps over at which the $2.5 billion of bonds priced as part of that gigantic offering.

Pfizer's 6.20% notes due 2019 were trading at 250 bps over, in about 10 bps from where they had ended last week, and again, well in from the 325 bps over level at which the company had priced the $3.25 billion of 10-year as part of the mega-deal. Over $25 million of the bonds traded on Monday.

And Pfizer's 4.45% notes due 2012 were quoted at 209 bps over - a little wider than the 200 bps over area at which they had wrapped up last week, but still in by almost 100 bps from the 305 bps over level at which the company had priced the $3.5 billion issue on March 17. Over $20 million changed hands on Monday.

Bank bonds mostly wider

A market source said that a number of banking credits were wider, reflecting the fall in bank shares amid renewed investor angst about the sector.

Among those names were Goldman Sachs Group Inc., whose 4.75% notes due 2013 were seen about 50 bps wider at around the 515 bps mark, and Wells Fargo & Co. Inc., whose 5% notes due 2014 were about 80 bps wider at the 680 bps over mark.

Surprisingly, some financials were seen having withstood the worry - even beleaguered Citigroup's 6.125% bonds due 2036, seen around 30 bps tighter at the 850 bps level, while General Electric Capital Corp.'s 2.25% notes due 2012, tightened several beeps to the 75 bps level, in active dealings.

Financial CDS levels seen wider

But 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 20 bps to 35 bps higher across the board, and saw CDS costs for investment-bank bonds rise by 10 bps to 20 bps as well.

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