Jefferies reopens notes; PNC prices preferreds; Jefferies' notes up in trading; Omnicom flat

By Andrea Heisinger and Cristal Cody

New York, April 19 - High-grade bond issuers mostly took the day off Thursday as earnings and other factors kept the market quiet after a fairly active Wednesday.

There was a reopening of notes due 2021 from Jefferies Group Inc. along with a deal from PNC Financial Services Group Inc. in the preferred stock market.

Jefferies reopened its issue of 6.875% notes due 2021 to add $200 million. There is $550 million already outstanding from the original deal and a previous reopening.

Bank of America Corp. reported first-quarter earnings at the top of the day, and revenue met analyst expectations. Including some one-time expenses for the quarter, the bank's revenue was $22.5 billion and net income was $653 million, which was a drop from the $2 billion made in the same period of 2011.

"The market was just kind of flat today," a source said in the late afternoon. "Don't think earnings had anything to do with it."

Issuance has been measured for much of the week. Wednesday saw the most deals, although the majority was from sovereign names.

"I don't think it's going to pick up," a syndicate source said of deal volume. "Maybe a little next week."

The Markit CDX Series 18 North American Investment Grade index eased 1 basis point to a spread of 100 bps on Thursday.

Not much action was seen in the secondary market on Thursday, traders said.

"Dull day, for me at least," one trader said.

Jefferies Group's reopened notes rose in trading, while Omnicom Group Inc.'s notes due 2022 sold on Wednesday traded flat to 1 bp wider.

Investment-grade bank and brokerage credit default swap costs were unchanged to higher on Thursday.

On the bank side, Bank of America's CDS costs ended flat at 260 bps bid, 270 bps offered. Citi's CDS costs rose 3 bps to 240 bps bid, 245 bps offered.

On the broker side, Merrill Lynch's CDS costs traded unchanged at 277 bps bid, 287 bps offered. Morgan Stanley's CDS costs widened 5 bps to 370 bps bid, 375 bps offered. Goldman Sachs' CDS costs rose 5 bps to 270 bps bid, 275 bps offered.

Treasuries ended mostly unchanged. The benchmark 10-year note yield fell 1 bp to 1.96%. The 30-year bond yield ended unchanged at 3.12%.

Jefferies reopens notes

Jefferies Group reopened its issue of 6.875% notes (Baa2/BBB/BBB) due April 2021 to add $200 million, a market source said.

Total issuance is $750 million including $550 million priced in the original offering and a subsequent reopening.

Jefferies & Co. was the bookrunner.

Proceeds are being used for general corporate purposes including further development and diversification of the business.

In the secondary market, the notes traded higher to 100.25 bid, 101.00 offered, up from the issue price of 98.875, a trader said.

The securities and investment bank is based in New York.

PNC's preferreds

PNC Financial Services Group priced a $1.5 billion offering of 6.125% fixed-to-floating-rate series P noncumulative perpetual preferred stock on Thursday, according to a market source.

Price talk was 6.25% to 6.375%, according to a trader. After May 1, 2022, the rate will be Libor plus a spread.

Around midday, a trader quoted the paper at $25.25 bid, $25.35 offered in the gray market. However, by the end of business, it was seen at par bid by a market source.

"It was pretty high before," he said, noting that the preferreds had gotten as high as $25.30 bid before falling back, hitting a low of $24.95.

The source added that the volatility set in after it was learned how big the deal was going to be.

Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and PNC Capital Markets LLC are the joint bookrunning managers.

The preferreds have a liquidation preference of $100,000 each. They will be issued as $25.00 depositary shares each representing a 1/4,000th interest in a preferred.

PNC will apply to list the shares on the New York Stock Exchange under the ticker symbol "PNCPP."

Proceeds will be used for general corporate purposes, including the repurchase and redemption of outstanding PNC and subsidiary securities, including trust preferreds.

PNC is based in Pittsburgh.

Omnicom flat

In secondary trading, Omnicom's 3.625% senior notes due 2022 were flat to 1 bp wider on the day, traders said.

The 10-year notes (Baa1/BBB+/A-) traded late afternoon at 171 bps bid, 169 bps offered and were seen going out at 170 bps offered.

A trader quoted the notes early in the day at 171 bps bid, 167 bps offered.

Omnicom Group, along with Omnicom Capital Inc. and Omnicom Finance Inc. as guarantors, priced $750 million of the notes at Treasuries plus 170 bps on Wednesday.

The holding company for marketing and corporate communications is based in New York.

Stephanie N. Rotondo contributed to this review

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