Anadarko, Fortune Brands, KfW, Ontario, Entergy unit price bonds; Fortune gains in trading

By Andrea Heisinger and Paul Deckelman

New York, June 9 - A solid market tone led to a decent showing of new deals in the high-grade primary including offerings from Anadarko Petroleum Corp., Fortune Brands, Inc., the Province of Ontario, KfW and Entergy Mississippi, Inc.

An upcoming sale of subordinated notes was announced by Dominion Resources, Inc. with a launch and pricing expected Wednesday.

Expectations are still for continued issuance Wednesday, with a tapering off after that, a source said.

A market source said there didn't seem to be much impact from the news that 10 major banks were given permission to pay back bailout money to the government.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 12 North American high-grade index edged downward by 3 basis points to a mid bid-asked spread level of 122 bps.

Advancing issues - which on Monday had trailed decliners by a better-than eight-to-seven edge - regained the lead Tuesday, by a margin of nine to seven.

Overall market activity, reflected in dollar volumes, climbed by 33% from Monday's levels.

Spreads in general were seen a little wider, in line with modestly lower Treasury yields; for instance, the yield on the benchmark 10-year government note fell by 3 bps to 3.85%.

Traders saw Fortune Brands' new bonds firming from the spreads at which they were issued.

Anadarko Petroleum's new paper was mixed, with two of the issue's three tranches seen having improved, but the third anchored around its pricing spread

Anadarko announces, prices deal late

Anadarko Petroleum didn't announce its three-tranche sale until late morning/early afternoon, a source said. It was also the last of the day's sales.

The company announced a two-tranche sale, but it grew into three tranches totaling $900 million.

The $275 million of 5.75% five-year notes priced at 295 bps over Treasuries. They were also talked at 295 bps, a source said.

The $300 million of 6.95% 10-year notes priced at 325 bps over Treasuries. Guidance was at 325 bps.

The third tranche was $325 million in 7.95% 30-year notes priced at Treasuries plus 335 bps. Talk was 335 bps.

The deal, although announced late, had strong investor interest, the source said. There was $2 billion in interest on the five-and 10-year notes, with the 30-year tranche announced after the books for the other two tranches had closed, he said.

The 30-year tranche had about $1 billion on the books.

"We had a lot of interest - about 180 accounts," he said. The slight delay in making a go call was due to "waiting on the tone of the market," he added.

The oil and gas exploration company, based in The Woodlands, Texas, is using proceeds to fund a portion of the redemption of a remaining $913 million floating-rate notes due Sept. 15, among other general uses.

KfW sells $3 billion

German-owned bank KfW sold $3 billion 4.875% 10-year global notes in a deal that was announced Monday and went overnight. The notes priced at 99.703, according to an FWP Securities and Exchange Commission filing.

Barclays Capital, Citigroup Global Markets and Goldman Sachs & Co. ran the books.

Fortune Brands offers five-years

Fortune Brands, a holding company for a variety of consumer businesses, sold $500 million of 6.375% five-year senior notes at 350 bps over Treasuries. It is based in Deerfield, Ill.

Barclays Capital, Credit Suisse Securities, J.P. Morgan Securities and RBS Securities were bookrunners.

Plans are to use proceeds to repay debt.

Dominion plans subordinated note sale

Dominion Resources plans to launch and sell a deal of enhanced junior subordinated notes Wednesday at par of $25, according to a 424B5 SEC filing.

The notes have an initial maturity of 2064, but are subject to extensions up to 2079.

The deal is expected to launch and price Wednesday, a source close to it said. The size is "growing beyond the initial $150 million" that was planned, she said.

This is the latest in a slow resurgence of subordinated and retail offerings. The source referenced a deal from Florida Power & Light in March that was successful.

"It had a similar structure," she said. "It priced at $25 and ran all the way up to $27. The structure works. It's all about timing and structure and there is a strong bid for utilities."

Bookrunners are Banc of America Securities LLC, Citigroup Global Markets, Morgan Stanley, UBS Investment Bank and Wachovia Capital Markets.

Proceeds will be used for general corporate purposes.

The energy producer and transporter is based in Richmond, Va.

Entergy unit prices small deal

Entergy Corp. subsidiary Entergy Mississippi sold $150 million of 6.64% 10-year first mortgage bonds early Tuesday at Treasuries plus 280 bps.

The proceeds are being used by the Jackson, Miss.-based electric company for a variety of things including repaying debt under a $35 million revolving credit facility, a $30 million revolver and short-term borrowings under the Entergy System money pool and for working capital.

Goldman Sachs and Scotia Capital ran the books.

Ontario prices $4 billion

The Province of Ontario priced $4 billion of 4.1% five-year notes at Treasuries plus 127.15 basis points, according to an FWP Securities and Exchange Commission filing.

Bookrunners were Deutsche Bank Securities, HSBC Securities, J.P. Morgan Securities and RBC Capital Markets.

The issuer is based in Toronto, Canada.

Tone steady, volume rises

The number of new deals hitting the high-grade primary jumped from a comparatively slow Monday, although it may be the pinnacle of volume for the week.

"I think it's still true that we'll see a few things tomorrow and then it will be quiet Thursday and Friday," a source said late Tuesday.

The tone of the day was good, perhaps bolstered by the news that 10 of the nation's largest banking names had been given permission by the government to pay back funds they received through the Troubled Asset Relief Program.

"It didn't really do much," a market source said. "I think maybe we saw Anadarko [today] instead of tomorrow because of it. It's more bad news that you see hitting tone."

Fortune smiles on Brands' new bonds

A trader said that Fortune Brands' new 6.375% notes due 2014 were seen at a spread over comparable Treasuries of 337 bps bid, 325 bps offered.

That was in from the 350 bps spread at which the Deerfield Ill.-based producer of alcoholic beverages and other consumer products had priced its $500 million issue.

Anadarko: two out of three firmer

A trader saw Anadarko Petroleum's new 5.75% notes due 2014 having tightened to 275 bpd bid, 265 bps offered, in from the 295 bps over level at which the Woodlands, Tex.-based independent oil and gas exploration and development company had priced its $275 million of five-year bonds, as part of the company's upsized $900 million three-part deal.

He also saw its 7.95% bonds due 2039 having likewise narrowed to 320 bps bid, 300 bps offered, from the 335 bps level at which that $325 million of bonds had priced.

However, the third part of the deal - its $300 million of 6.95% notes due 2019 - were trading in the afternoon at 325 bps bid, 319 bps offered, little changed from the 325 bps level at which the bonds had priced earlier in the day.

Financials quietly firmer

A trader in financial issues meantime said that his sector was "kind of quiet, generically better," with much of the focus on recently priced paper such as PNC Funding Corp.'s 5.40% notes due 2014 trading at 270 bps bid, 260 bps offered, versus the 290 bops over level at which the Pittsburgh-based financial services company had priced its $400 million of those bonds last Thursday.

He also saw the other part of that two-tranche deal - PNC's $600 million of 6.70% notes due 2019 - at 285 bps bid, 275 bps offered. The company had priced those bonds at a spread of 305 bps over, also last Thursday.

TARP payback has little impact

Elsewhere in the sector, the trader said, the news that 10 big banks will be allowed by government regulator to repay a total of $68 billion of funds they got under the TARP bailout program back to the federal Treasury had little or no impact on the bonds of such financial giants as JP Morgan Chase & Co., Goldman Sachs Group Inc. , American Express Co. and Morgan Stanley, all of whom had been widely rumored to be on the list of such institutions, along with Bank of New York Mellon, BB&T, Capital One Financial , Northern Trust, State Street Corp. and US Bancorp.

"It really hasn't had an impact," he said. "It was kind of assumed, -- but it didn't do much."

However, at another shop, a trader quoted American Express' 7.30% notes due 2013 as having firmed by about ½ point on a dollar-price basis to 102 7/8 bid, 103 3/8 offered, calling that a "pretty significant move."

Bank and broker CDS costs rise

A trader watching the credit-default swaps market meantime saw the cost of protecting the holders of big-bank and major brokerage paper tighten, a sign of increased investor confidence in the sector.

He said that credit-protection costs for bank paper were unchanged to 8 bps tighter, while brokerage company CDS costs were 5 bps tighter "across the board."

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