Procter & Gamble unit, Cigna, International Paper price deals; secondary quiet; spreads flat

By Andrea Heisinger

New York, May 4 - New deals from Procter & Gamble International Funding SCA, Cigna Corp. and International Paper Co. gave the investment-grade primary sector something to work with Monday.

Some issuers may have come into the market early due to the postponement of bank stress test results until Thursday. A source said the news didn't affect the primary much, or its new offerings.

The secondary was quiet, a trader said, likely due to a holiday overseas.

As a result, new and recently priced offerings weren't moving much. Perhaps the biggest gainer as of mid-afternoon was Friday's sale from Rockwell Collins Inc., which tightened a solid 25 basis points.

Spreads moved little from Friday as Treasury yields were a mixed bag with some unchanged, and others slightly wider or tighter. The 10-year note was unchanged to yield 3.15% by late afternoon, while the 30-year bond was 2 bps better with a 4.05% yield.

Cigna offers 10 year

Health services company Cigna sold $350 million of 8.5% 10-year senior notes Monday at Treasuries plus 537.5 bps. The size of the deal was set from the start, a source close to it said.

"They weren't going to increase it," he said.

The Philadelphia-based issuer is using proceeds for various purposes, including repaying commercial paper.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. ran the books.

P&G unit sells $2 billion

Procter & Gamble International Funding sold $2 billion of one-year floating-rate notes Monday at par to yield three-month Libor plus 1 bp. A source close to the deal said price guidance was Libor plus 3 bps but was able to be tightened.

The notes are guaranteed by parent company Procter & Gamble Co. - the consumer goods maker based in Cincinnati.

Bookrunners were Citigroup, JPMorgan and RBS Securities Inc.

International Paper sells $1 billion

Paper and packaging company International Paper sold $1 billion of 9.375% 10-year notes to yield 9.75%. The notes priced to yield Treasuries plus 658.7 bps.

Citigroup and UBS Investment Bank ran the books.

The Memphis-based company is using proceeds to help repay debt and for general corporate purposes.

Industrials dominate primary

New issuance was focused on the non-financial sector, although the deals were rather light.

"We had some deals, but they weren't that exciting," a market source said. "This is probably how the next couple of days will go."

Government stress test results for the 19 largest banks in the country were supposed to be released Monday but were instead pushed back to Thursday. This caused some issuers to reposition their new deals, a source said.

"I think some people were waiting until later [in the week] because of the [stress test] results," he said. It's still up in the air whether the reports will aid or hurt new issuance volume.

Some banks are reportedly working to add capital before the results come out, accounting for the delay.

This announcement didn't really affect issuance for the day, a source said.

The remainder of the week is said to be filled with mostly BBB-rated names. This held true Monday, with two of the three issues coming from lower-rated names.

New International Paper improves

The new 9.375% bond due 2019 from International Paper was doing well in the secondary soon after pricing, a trader said. The bond priced at a yield and was trading at a dollar price, he said.

It priced at 97.634 and traded at 98.375 bid, 98.625 offered.

Cigna bond tightens

Cigna's 8.5% bond due 2019 was slightly better after pricing, a trader said. He quoted a level of 530 bps bid soon after trading but said he wasn't entirely sure if it had been freed for trading yet. The notes priced at Treasuries plus 537.5 bps.

BP Capital unchanged

A 3.625% bond due 2014 that priced late Friday at 165 bps over Treasuries was being quoted virtually unchanged at 165 bps bid, 162 bps offered, a secondary source said late Monday.

Rockwell Collins moves in

The recently priced 5.25% bond due 2019 from Rockwell Collins was improved in trading late Monday from its pricing level Friday, a trader said. The bond priced at Treasuries plus 215 bps and was at 190 bps bid in the secondary.

Non-financial sector quiet

The non-financial sector of the secondary was "quiet" with "not a whole lot of activity," by late Monday, a trader said.

The sluggish feel was likely due to a holiday overseas, he said, and not the news that the airing of bank stress test results was being pushed back a couple of days. "Spreads were OK," he added.

Goldman bond tops trading

An older bond from Goldman Sachs Group Inc. that is not backed by the Federal Deposit Insurance Corp. was at the top of trading early Monday afternoon, a market source said.

This bond was one of the few from a financial name trading at high volume. The company sold $2 billion of bonds the previous week without the backing of the FDIC.

Recent issues were also popular Monday, including both tranches of a deal from Potash Corp. of Saskatchewan Inc. priced April 28.

An outstanding 7.95% bond due 2018 from International Paper was the third most popular bond in trading, the source said. This was the case before the company's new bond had priced.

Financials move big

Several financial names were among the day's biggest movers by late Monday, a market source said.

A 6.75% bond due 2011 from HSBC Finance was about 75 bps tighter than the week before, and a 5.625% note due 2012 from Citigroup was in nearly 70 bps. Goldman Sachs, a popular name for the day, saw its 5.35% bond due 2016 tighten more than 60 bps.

A 4.875% bond due 2013 from American Express was nearly 30 bps wider than the previous week. And Merrill Lynch had a 5.45% bond due 2013 widen 20 bps.

Bank, broker CDS mixed

Bank and broker credit-default swaps were slightly tighter to unchanged by late Monday, a trader said.

The bank CDS were 5 to 10 bps tighter, he said, while brokers were "even to 10 bps tighter."

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