Issuers coming out of earnings blackout to price in coming week; banks firm; Nokia weakens

By Andrea Heisinger and Cristal Cody

New York, April 20 - The low-volume week ended with no new deals Friday, although some issuers are expected to tap the market in the coming week.

According to Prospect News data, issuers priced $11.2 billion of high-grade bonds in 11 deals during the week. A syndicate source said their desk had the total at $5.6 billion for the week. Market participants had expected the week's issuance volume to be in the $5 billion to $10 billion range.

The coming week is seen "the same. Pretty light, nothing too exciting," the syndicate source said.

"We should have a couple of big names. Because of earnings, people who waited from this week."

A second syndicate source from a large desk said they are seeing $5 billion to $10 billion and they have four to five issuers looking to go.

"It should be front loaded," she said. "We definitely have some people looking. There are two non-U.S. issuers since they're on a different [earnings] schedule."

Trading was mostly quiet on Friday.

The Markit CDX Series 18 North American Investment Grade index was flat at a spread of 100 basis points.

Nokia Corp.'s bonds traded 2½ to 3 points lower a day after the company reported weaker first-quarter sales.

"Nokia was the big mover in my space," one trader said.

Jefferies Group, Inc.'s issue that reopened on Thursday traded lower on Friday.

Lowe's Cos. Inc.'s long bonds sold on Monday widened 2 bps in the secondary market.

Bank and financial paper traded 3 bps to 5 bps better.

Goldman Sachs Group, Inc.'s 5.75% notes due 2022 and Morgan Stanley's 5.5% notes due 2021 both firmed 5 bps in trading.

Investment-grade bank and brokerage credit default swap costs were mixed on Friday.

Banks were mixed. Bank of America's CDS costs were unchanged at 260 bps bid, 270 bps offered. Citi's CDS costs traded flat at 240 bps bid, 245 bps offered. JPMorgan's CDS costs also were flat at 104 bps bid, 108 bps offered. Wells Fargo's CDS costs firmed 2 bps to 90 bps bid, 95 bps offered.

On the broker side, Merrill Lynch's CDS costs were seen unchanged at 280 bps bid, 290 bps offered. Morgan Stanley's CDS costs traded flat at 370 bps bid, 375 bps offered. Goldman Sachs' CDS costs widened 5 bps to 275 bps bid, 280 bps offered.

Treasuries ended flat after a flurry of early-morning selling. The 10-year note yield closed unchanged at 1.96%, and the 30-year bond yield was flat at 3.12%.

PNC gives terms of preferreds

PNC Financial Services Group, Inc. gave further details on its $1.5 billion offering of 6.125% fixed-to-floating-rate series P noncumulative perpetual preferred stock in an FWP filing with the Securities and Exchange Commission on Friday.

The deal priced at par late Thursday. After May 1, 2022, the dividend rate will be Libor plus 406.75 bps.

There is a $75 million over-allotment option.

The company can redeem the preferreds on or after May 1, 2022 or within 90 days of a regulatory capital treatment event.

"Once they adjusted the price talk, it came in pretty quickly," a trader said. Original talk was 6.25% to 6.375%.

"It has been active," the trader noted, seeing paper at $25.08 bid, $25.15 offered around midday in the gray market.

After the close, a trader said the preferreds were "hanging in there" around $25.15.

"It sort of stalled out there," he said. "It traded higher earlier in the day."

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 preferreds on the New York Stock Exchange under the ticker symbol "PNCPP."

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

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.

Nokia weaker

Nokia's 5.375% notes due 2019 dropped 2½ to 3 points to 88.5 bid, 89.5 offered on Friday, a trader said.

The notes (A1/A/) priced on April 30, 2009 in a $1 billion offering at 99.075.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

Jefferies lower

Jefferies' reopened 6.875% notes due 2021 traded lower at 99.75 bid, 100.75 offered, a trader said on Friday.

Jefferies reopened the notes (Baa2/BBB/BBB) on Thursday in a $200 million offering priced at 98.875.

The securities and investment bank is based in New York.

Lowe's wider

Lowe's long bonds sold as part of a $2 billion three-tranche offering of senior notes (A3/A-/BBB+) on Monday eased in trading on Friday, a trader said.

The 4.65% bonds due 2042 widened to 157 bps bid, 152 bps offered.

Lowe's sold $750 million of the 30-year bonds at Treasuries plus 155 bps.

The home improvement retailer is based in Mooresville, N.C.

Goldman Sachs tightens

Goldman Sachs' 5.75% notes due 2022 traded 5 bps tighter at 348 bps bid, 333 bps offered on Friday, a trader said.

Goldman Sachs sold $4.25 billion of the 10-year notes (A1/A-/A) at a spread of Treasuries plus 380 bps on Jan. 19.

The financial services company is based in New York.

Morgan Stanley firms

Morgan Stanley's 5.5% notes due 2021 traded 5 bps better at 407 bps bid, 402 bps offered, a trader said Friday afternoon.

Morgan Stanley sold $1 billion of the notes (A2/A/A) on Oct. 27 at a spread of 335 bps over Treasuries.

The investment bank is based in New York.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.