ANZ Banking Group sells floaters; primary issuance cools; Regions Financial, Kraft bonds widen

By Andrea Heisinger and Cristal Cody

New York, Nov. 23 - ANZ Banking Group Ltd. was about the only investment-grade deal priced on Tuesday, sources said.

The Australia-based financial services company sold $200 million of two-year floating-rate notes.

A source who follows domestic corporate issues in the primary market said that it was "really quiet - none that I was aware of."

General Electric Capital Corp. gave terms for its $100 million issue of fixed-to-floating-rate notes due 2014 that priced Monday.

In secondary trading, Regions Financial Corp.'s bonds widened on the downgrade from Standard & Poor's, while financial paper overall eased, sources said.

"Probably 3 to 5 basis points wider today," a trader said. "That would go for most of the investment-grade space."

Debt in the retail and food and beverage sectors also widened on Tuesday by about 2 bps, a trader said.

The Markit CDX Series 14 North American investment-grade index eased 4 bps to a spread of 95 bps, according to Markit Group Ltd.

Overall investment-grade Trace volume was light, though up 7% to about $10.5 billion, a source said.

Treasuries gained slightly early on Tuesday on rising tension after artillery fire was exchanged between North Korea and South Korea.

"The other issue dominating the markets is the continued turmoil in the eurozone," a source said.

The yield on the 10-year benchmark Treasury note fell 3 bps to 2.77%. The yield on the 30-year bond fell to 4.19% from 4.2%.

ANZ prices floaters

ANZ Banking Group sold $200 million of two-year senior floating-rate notes at par to yield Libor plus 27.5 bps, a source away from the sale said late in the day.

The notes (Aa1/AA) were priced under Rule 144A.

The bookrunner was J.P. Morgan Securities LLC.

The financial services company is based in Melbourne, Australia.

New bonds scarce

The rest of the week is likely to have little to no issuance of high-grade bonds, a source said late in the day.

"There could be something from overseas that needs to get done, but probably no domestics," he said.

Tuesday's lone deal was from an Australian issuer, and Monday's came from a Canadian name - Potash Corp. of Saskatchewan Inc.

The coming day "should be quiet," a syndicate source said. Friday is expected to have no new deals and minimal desk staffing.

With only two or three real weeks of issuance left for the year, it's thought that the week after Thanksgiving could be a busy one.

One source said that it's "too soon to tell" and that "no one's going to make a call until late Friday or Monday."

GE Capital hybrid terms

General Electric Capital sold $100 million of fixed-to-floating-rate notes due 2014, according to an FWP filing with the Securities and Exchange Commission Tuesday.

The notes priced at par on Monday and have a fixed rate of 1.5% until Dec. 6, 2011. From that date until maturity, they have a floating rate of Libor plus 50 bps.

Barclays Capital Inc. was the bookrunner.

The funding arm of General Electric Co. is based in Norwalk, Conn.

Financials, Regions weaker

GE Capital's sale of 1.5% fixed-to-floating-rate notes were not seen in the secondary market by traders.

The financial sector was weaker overall, including paper from Regions Financial, traders said.

S&P downgraded Birmingham, Ala.-based Regions Financial to BB+/B from BBB-/A-3 on Tuesday on growing losses.

"Seemed like Regions Financial was lower by a quarter to a half point on the downgrade," one trader said.

Kraft wider

High-grade debt in the retail and food and beverage sectors also moved out on Tuesday.

Kraft Foods Inc.'s 5.375% notes due 2020 widened by late afternoon, "closing the day at 108, 105, 2 basis points wider," a trader said.

Kraft is a Northfield, Ill.-based food manufacturer.

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