Citigroup sells FDIC notes, Nokia prices two-parter; spreads steady; Goldman non-FDIC deal up

By Andrea Heisinger and Paul Deckelman

New York, April 30 - The new deal market remained active Thursday following the previous day's crop of issues, with two units of Citigroup Inc. pricing a deal backed by the Federal Deposit Insurance Corp. and Nokia Inc. selling notes that went overnight.

In the secondary arena on Thursday, a market source said the CDX Series 12 North American high-grade index was tighter by 6 basis points, at a mid bid-asked spread level of 163 bps.

Advancing issues led decliners by a ratio of not quite four to three.

Overall market activity, reflected in dollar volumes, was down about 3% from Wednesday's levels.

Spreads in general were seen little changed, in line with generally steady Treasury yields; for instance, the yield on the benchmark 10-year government note rose 1 bp to 3.12%

One of the standout performers was Goldman Sachs Group Inc.'s new issue of non-FDIC-based bonds.

Citigroup taps FDIC program

Citigroup Funding and Citibank NA priced another issue with the backing of the FDIC on Thursday. The $7 billion deal was done in four tranches divided between fixed-and-floating-rate notes.

The $1.2 billion of two-year floating-rate notes from Citigroup Funding priced at par to yield three-month Libor minus 8 bps.

The $1.25 billion tranche of three-year floaters from Citibank NA priced at par to yield three-month Libor plus 3 bps.

There were also two fixed-rate tranches.

The $2.3 billion of 1.375% two-year notes from Citigroup Funding priced at Treasuries plus 48.3 bps, while the $2.25 billion of 1.875% three-year notes from Citibank NA priced at 59 bps over Treasuries.

Citigroup Global Markets was bookrunner.

This is the latest financial issue to come out after earnings season, and follows a sale from Goldman Sachs Group Inc. that priced Wednesday without the FDIC umbrella. JPMorgan Chase & Co. also recently priced a deal outside the FDIC guarantee.

Citigroup sold a similar $7 billion of FDIC-backed notes in five tranches on March 25.

Nokia sells 10-, 30-year notes

Mobile device maker Nokia sold $1.5 billion of 10- and 30-year notes early Thursday. The deal had been announced late Wednesday after a Federal Reserve meeting where the key interest rate was unchanged.

The $1 billion of 5.375% 10-year notes priced at Treasuries plus 237.5 bps, while the $500 million of 6.625% 30-year notes priced at Treasuries plus 262.5 bps.

The company, based in Espoo, Finland, is using proceeds for general corporate purposes.

It tapped Banc of America Securities LLC, Barclays Capital Inc., Credit Suisse Securities and J.P. Morgan Securities as bookrunners.

Whirlpool notes in demand

The $850 million of notes in two tranches priced Wednesday by Whirlpool Corp. were described as "massively oversubscribed" by a source soon after the sale. There were also severe allocations, the source said, describing some accounts as unable to get in on the deal.

A source close to the deal said Thursday that "we had a ton of interest." The book on the $500 million tranche of five-year notes was 10-times oversubscribed, he said. The $350 million of three-year notes was only slightly less in demand at six-times oversubscribed.

Both tranches priced at Treasuries plus 662.5 bps, which was tighter than price talk. The source close to the deal said guidance was the 700 bps area for both, with a margin of plus or minus 25 bps.

Issuance rush winds down

New deals are again being done opportunistically, a market source said Thursday. This is due to an end of earnings blackouts and spotty market conditions.

"There are some issuers that are holding back, but like we saw [Wednesday] they'll come out," a source said. Some of the previous day's crop of issuers strategically timed their transactions for before or after the announcement from the Federal Reserve meeting to price or plan their sale.

One of those, from Nokia, was announced late in the day and went overnight. Citigroup's sale was also started Wednesday, but the overnight time period is common for FDIC-backed deals.

"Some BBB [rated] issuers think it's a good time to come in," a source said, citing Whirlpool as an example.

Friday "should be quiet," a market source said, adding "unless some financial decides to do some FDIC notes."

New Goldman bonds are golden

A trader said that Goldman Sach's new issue of non-FDIC backed bonds --- seen as a bellwether for other financial companies that may decide to go into the market for such bonds without the government guarantee - performed well when it moved into the secondary realm.

He said that the big New York-based investment bank-turned commercial banking company's 6% notes due 2014 "traded up today versus [Wednesday.]."

He saw the issue gain to a bid spread of 385 bps over comparable Treasuries, with a 380 bps offered level, but allowed that "they might even be better than that," perhaps as tight as 383 bps bid, 375 bps offered.

That stands in contrast to the 410 bps over level at which the company priced its $2 billion issue of bonds on Wednesday.

Potash bonds remain potent

Also among recently priced issues, Potash Corp. of Saskatchewan Inc.'s new 5.25% notes due 2014 continued to trade at levels sharply tighter than where the bonds had priced.

A market source quoted the issue trading at 245 bps over - well in from the 337.5 bps level at which the Canadian chemical manufacturer priced its $500 million of bonds on Tuesday. About $25 million of the bonds had changed hands as of mid-afternoon, making it one of the more busily traded issues on the day.

The other half of that issue, the $500 million of 6.50% notes due 2019, were not seen among the most actives. They had priced Tuesday at 350 bps over.

Verizon bonds very busy

Among the more established issues, one of the busiest on the session was Verizon Communications Inc.'s 6.35% notes due 2019, with over $90 million of the paper having changed hands by mid-afternoon, a market source said.

Those bonds were seen trading solidly higher on the session, at a spread of 238 bps over. The source said that in dollar-price terms, the bonds had firmed about 1½ points on the day to just below the 106 bid level. No fresh news was seen out that might explain the intense activity in that particular credit.

Big move seen for GE Capital

One of the biggest gainers, on a spread-tightening basis, was General Electric Capital Corp., whose 5.25% notes due 2012 were seen trading around the 330 bps over bid level - in about 50 bps on the day.

There was no immediate news seen on the Fairfield, Conn.-based financial arm of industrial conglomerate General Electric Co.

Its 5.44% notes due 2011 were meantime seen at 925 bps over, in very busy dealings of around $60 million by mid-afternoon.

Little change seen in American Express

The news that Standard & Poor's had downgraded American Express Co.'s debt by several notches seemed to have little impact on the level of its bonds.

A trader said the New York-based credit-card and travelers check giant's bonds were "still well bid for versus where it's been." He said it "really hasn't moved much."

The ratings agency dropped AmEx's counterparty credit rating by two notches to BBB+ and cut its preferred stock rating by three notches to BB, actually putting it into junk territory. S&P said the outlook is negative, meaning it could lower the ratings again in the next 12 to 18 months.

The agency warned that the potential was there for American Express' borrowing costs to rise, even amid an environment of falling profits.

Bank, broker CDS costs tighten

In the credit default swaps market, a trader said that CDS costs to protect holders of big-bank paper against a possible default were anywhere from unchanged to 5 bps tighter on the day.

He also saw debt-protection costs for holders of investment-bank paper moving within that same kind of narrow 0 to 5 bps tighter range.

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