PG&E sells short-dated floaters, two foreign financials launch deals; Potash trades weaker

By Andrea Heisinger and Cristal Cody

New York, Oct. 6 - With a wide variety of headlines and economic data coming out on Wednesday, the high-grade market was mostly empty of new deals except for some floating-rate notes from Pacific Gas & Electric Co.

Earnings season is nearing, and that also may have been one reason for the almost empty market.

"We weren't looking at a lot of volume anyway," one syndicate source said.

There was also some data out from ADP showing that private employers shed 39,000 jobs in September. The Labor Department releases its jobs figures on Friday, with an uptick expected.

"There were some headlines, but I don't know what that did [to the market]," the source said.

Two deals from overseas financial names Barclays Bank plc and DnB NOR were launched late in the day, and pricing information was not available at press time.

The primary side of the market is expected to remain at low volume for the rest of the week, a syndicate source said.

"It's a quiet market today," he said late in the afternoon. "I think we'll have a [earnings] blackout in full effect."

He added that it's not so much earnings keeping people out of the market, but "the long weekend coming up" for the Columbus Day holiday.

The Markit CDX Series 14 North American investment-grade index stayed unchanged on Wednesday at a spread of 99 basis points, Markit Group Ltd. said.

In secondary trading on Wednesday, Potash Corp. of Saskatchewan Inc.'s notes stayed flat to slightly wider on the hostile $40 billion takeover offer on the table from BHP Billiton Ltd., traders said.

Overall investment-grade Trace volume fell 1% to about $14.5 billion, a market source said.

Treasuries jumped, sending yields down, on Wednesday on negative job data that raised expectations for additional quantitative easing by the Federal Reserve to stimulate the economy.

The yield on the benchmark 10-year note fell to 2.38% from 2.46%. The 30-year bond yielded 3.67%, down from 3.74% the previous day.

PG&E sells floaters

San Francisco-based Pacific Gas & Electric sold $250 million of one-year senior unsecured floating-rate notes (A3) at par to yield Libor plus 58 bps, according to an FWP filing with the Securities and Exchange Commission.

Citigroup Global Markets and Deutsche Bank Securities ran the books.

The deal was already sold by the time it launched in late morning and there was no price talk, a source said.

Proceeds are being used to support the liquidity requirements relating to commodity hedging activities including using net proceeds to repay a portion of outstanding commercial paper issued to satisfy margin calls relating to that activity.

The issuer is an electric and natural gas utility.

Deals launched by foreign financials

A benchmark deal of 10-year subordinated notes was launched late in the day by Barclays Bank, a source away from the sale said. The deal was being done by Barclays Capital Inc.

Another sale was announced by Norway's DnB NOR, which was expected to price $2 billion of five-year covered bonds. The source said they were launched earlier at 68 bps over mid-swaps and that they priced late.

The bookrunners for that sale are Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities and Morgan Stanley & Co. Inc.

Potash weaker on bid

Also in the secondary market, Potash Corp.'s notes were slightly wider in trading on Wednesday compared to the start of the week, traders said.

Potash has rejected Melbourne, Australia-based mining giant BHP's takeover offer as too low.

Saskatoon, Saskatchewan-based Potash is the world's largest manufacturer of potash, a key crop nutrient.

Potash's outstanding investment-grade debt includes 5.25% senior notes due 2014, 3.75% senior notes due 2015, 6.5% senior notes due 2019 and 4.875% senior notes due 2020.

The notes due 2019 traded on Wednesday at 150 bps bid, 135 bps offered.

The notes due 2020 were seen with a bid of 150 bps.

The notes were slightly wider from trading seen on Monday, a source said.

The notes due 2019 traded at an offer of 148 bps, while the notes due 2020 traded at an offer of 150 bps.

Also in trading on Wednesday, Potash's bonds due 2036 traded at a bid of 185 bps.

© 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.