Huntington National prices, meets demand; Goldman, BNY recover from weak early secondary

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 15 - Huntington National Bank came to the primary market on Friday, capping off a mostly positive week for the high-grade market.

The bank sold a $500 million issue of 1.3% senior notes at Treasuries plus 75 basis points during the session.

The deal attracted a "pretty strong" order book, a syndicate source said, noting that the issue was roughly three times oversubscribed.

Huntington's deal priced 10 bps tighter than price talk.

New deals brought to the high-grade market are still meeting strong demand, sources said, indicating that issuance is not expected to slow in the upcoming week.

"Not really seeing too many signs of [investor] fatigue as of yet," a market source said.

Meanwhile, market participants continue to anticipate that the Federal Reserve will hold off on tapering the stimulus program until 2014.

Bank paper traded moderately better over the day after spreads widened early in the secondary market following the senior debt rating cuts by Moody's Investors Service, according to a trader on Friday.

Moody's said on Thursday that it cut the ratings by one notch on four major U.S. banks, including Goldman Sachs Group Inc. to Baa1 from A3 and the Bank of New York Mellon Corp. to A1 from Aa3.

In the secondary market on Friday, Goldman Sachs' 3.625% notes due 2023 (Baa1/A-/A) headed out at 136 bps bid, 133 bps offered, in from 139 bps bid, 133 bps offered earlier in the day, a trader said.

"They're slightly tighter now," the trader said. "They were initially weaker, but they've tightened on the back of uncertainty."

The New York City-based financial services company sold $2.25 billion of the notes in January at a spread of Treasuries plus 185 bps.

Bank of New York Mellon's 1.35% notes due 2018 (A1/AA-/AA-) traded late in the day at 39 bps bid, 32 bps offered, a trader said.

"They widened in the morning, and they've recovered a bit," the trader said.

The New York City-based financial services company sold $600 million of the notes in March with a spread of Treasuries plus 60 bps.

In other trading, Huntington National Bank's new notes were not seen initially in the secondary market on Friday.

Black Hills Corp.'s 4.25% senior notes due 2023 traded 4 bps better from issuance on Thursday, a trader said.

Potomac Electric Power Co.'s 4.95% first mortgage bonds due 2043 were quoted slightly better but not very active in trading, according to a market source.

The Markit CDX North American Investment Grade series 21 index firmed 2 bps to a spread of 70 bps.

"Volume is fairly high compared to the past five Fridays," a source said. "It's been up above the last five weeks' average of trading for a Friday."

Huntington prices tight

Friday's lone new issue came from Huntington National Bank, which priced a $500 million of 1.3% senior notes (A3/BBB+/) with a spread of Treasuries plus 75 bps, according to a market source.

The notes sold 10 bps tighter than talk.

The deal's order book reached more than $1.5 billion.

Pricing was at 99.979 to yield 1.307%.

Proceeds will be used for general corporate purposes.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Huntington National Bank were the joint bookrunners.

The banking affiliate of Huntington Bancshares is based in Columbus, Ohio.

Black Hills better

Black Hills' 4.25% senior notes due 2023 firmed to 156 bps on Friday, a source said.

The company sold $525 million of the 10-year notes (Baa2/BBB/BBB) at Treasuries plus 160 bps on Thursday.

The energy company is based in Rapid City, S.D.

Light trade in Pepco

Potomac Electric Power's 4.95% first mortgage bonds due 2043 were quoted earlier in the day at 111 bps bid, according to a market source.

"Not seeing any prints right now," the source said. "They're just above par."

The company priced $150 million of the 30-year bonds (A3/A/A-) at Treasuries plus 115 bps, or 99.259, to yield 4.998%, on Thursday.

Potomac Electric is a utility based in Washington, D.C.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined on Friday, according to a market source.

Bank of America Corp.'s CDS costs firmed 3 bps to 91 bps bid, 95 bps offered. Citigroup Inc.'s CDS costs tightened 2 bps to 87 bps bid, 92 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 80 bps bid, 85 bps offered. Wells Fargo & Co.'s CDS costs declined 1 bp to 50 bps bid, 55 bps offered.

Merrill Lynch's CDS costs tightened 2 bps to 93 bps bid, 99 bps offered. Morgan Stanley's CDS costs declined 2 bps to 106 bps bid, 109 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 111 bps bid, 115 bps offered.

Paul Deckelman contributed to this review.

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