Morgan Stanley, PNC Financial, Senior Housing issue bonds; new deals trade mixed in secondary

By Aleesia Forni

Virginia Beach, April 23 - Financial names made up the bulk of new issuance on Wednesday, with Morgan Stanley & Co. Inc. and PNC Financial Services Group Inc. hitting the primary.

Morgan Stanley sold new bonds on the heels of its dual offering of preferred stock, which sold on Tuesday.

The bank sold a $3 billion issue of 3.875% notes due 2024 with a spread of Treasuries plus 130 basis points during the session on Wednesday, a market source said.

Pricing was at the tight end of talk, which was set in the area of Treasuries plus 135 bps.

Also on Wednesday, PNC Financial Services Group priced $750 million of 10-year subordinated notes at the tight end of talk with a spread of Treasuries plus 125 bps.

Senior Housing Properties Trust brought to market a $650 million issue of senior notes in two parts on Wednesday.

The company sold $400 million of 3.25% five-year notes at Treasuries plus 155 bps and $250 million of 4.75% 10-year notes at Treasuries plus 210 bps.

KfW sold a $1 billion issue of 18-month floating-rate notes on Wednesday at one-month Libor plus 1 bps, an informed source said.

In other market action on Wednesday, Kommunalbanken AS announced plans to price $500 million of five-year floating-rate notes in a Rule 144A and Regulation S deal.

"Positive tone to the week," a market source said late Wednesday.

With recent deals seeing strong investor demand and credit spreads continuing to trade tighter, the source noted that "the window for [new] issuance is wide open."

In the preferred market, Citigroup Inc. announced plans to sell $1,000-par series M fixed-to-floating-rate noncumulative preferreds.

However, a trader wasn't seeing the issue in the gray market early in the day. After the bell, a trader quoted the securities at 99.75 bid, par offered.

"They came off a little bit," he said, noting that the issue had traded north of par previously.

"These deals are big enough that they don't need any help putting them away," a trader said. "There is very little retail interaction."

A trader said he had heard that the deal priced at par to yield 6.3%, but he had no other details.

In secondary action, new issues priced during the day traded mixed near the end of the session.

Morgan Stanley's 3.875% notes due 2024 traded slightly wider, a trader said.

PNC Financial's 3.9% 10-year subordinated notes were quoted 2 bps better, according to a trader.

Meanwhile on Wednesday, investment-grade bank and brokerage CDS prices increased on the day.

Morgan Stanley prices tight

Morgan Stanley priced $3 billion of 3.875% 10-year notes (Baa2/A-/A) on Wednesday with a spread of Treasuries plus 130 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.124 to yield 3.982%.

The notes sold at the tight end of talk, which was set in the Treasuries plus 135 bps area.

The notes were quoted at 131 bps bid, 130 bps offered shortly after issuance.

Morgan Stanley & Co. LLC was the bookrunner.

The financial services company is based in New York City.

PNC subordinated notes

PNC Financial Services Group sold $750 million of subordinated notes (Baa1/BBB+/A) due 2024 with a spread of Treasuries plus 125 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.737 to yield 3.932%.

A trader quoted the notes at 123 bps bid, 121 bps offered late Wednesday.

Goldman Sachs & Co., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and PNC Capital Markets LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include advances to subsidiaries to finance their activities, repayment of outstanding debt, and repurchases and redemptions of issued and outstanding securities of PNC and its subsidiaries.

PNC is a Pittsburgh-based bank and holding company.

Senior Housing two-parter

Senior Housing Properties Trust priced $650 million of senior notes (Baa3/BBB-/) in tranches due 2019 and 2024, according to an FWP filed with the SEC.

The company priced $400 million of 3.25% notes due 2019 with a spread of Treasuries plus 155 bps.

Pricing was at 99.926 to yield 3.266%.

There was also $250 million of 4.75% 10-year notes, which priced at 99.684 to yield 4.79%.

The issue sold with a spread of Treasuries plus 210 bps.

Proceeds will be used for general business purposes, including funding acquisitions and repaying certain mortgage notes.

The joint bookrunners were Citigroup Global Markets, Jefferies & Co., Morgan Stanley and Wells Fargo Securities LLC.

The real estate investment trust is based in Newton, Mass.

KfW new issue

KfW (Aaa/AAA/AAA) priced $1 billion of floating-rate notes due Oct. 30, 2015 at one-month Libor plus 1 bp, according to an informed source.

The notes sold in line with talk, which was set in the area of one-month Libor plus 1 bp.

HSBC Securities and Morgan Stanley are the joint bookrunners.

The German government-owned development bank is based in Frankfurt.

Kommunalbanken eyes floaters

Kommunalbanken is planning to price a $500 million issue of floating-rate notes (Aaa/AAA/) due 2019, a market source said.

The sale is being done under Rule 144A and Regulation S.

The bookrunners are Barclays, JPMorgan and RBS Securities Inc.

The government-funded lender to municipalities is based in Oslo.

Bank/brokerage CDS rise

Investment-grade bank and brokerage CDS prices rose, according to a market source.

Bank of America Corp.'s CDS costs eased 1 bp to 62 bps bid, 65 bps offered. Citigroup's CDS costs rose 2 bps to 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 55 bps bid, 58 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 34 bps bid, 37 bps offered.

Merrill Lynch's CDS costs rose 1 bp to 67 bps bid, 71 bps offered. Morgan Stanley's CDS costs rose 1 bp to 73 bps bid, 76 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 1 bp to 83 bps bid, 86 bps offered.

Stephanie Rotondo contributed to this review.

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