General Mills, Marathon, BP, SunTrust, Georgia Power, AmEx, Principal price; Bunge pulls issue

By Andrea Heisinger and Paul Deckelman

Omaha, March 12 - Issuers continued to take advantage of a window of stability Wednesday, with pricings from General Mills, Inc., Marathon Oil Corp., BP Capital Markets, SunTrust Bank, Georgia Power Co., American Express Co. and Principal Income Life Funding Trust 35.

Several other issues were announced but are not expected to price until Thursday.

But there was one casualty claiming market conditions: Bunge Ltd. pulled a proposed offering.

In the investment-grade secondary market Wednesday advancing issues outnumbered decliners by a better-than six-to-five ratio, while overall market activity, reflected in dollar volumes, rose about 12% from Tuesday's.

Spreads in general widened out, as Treasury yields came in markedly, the benchmark 10-year note, for instance, narrowing by a dozen basis points.

Bear Stearns & Co.'s bonds - which were seen leading the way downward on Monday on rumors of a liquidity crunch - and which also led the way back upward on Tuesday, as the rumors were challenged by the company - were little seen on Wednesday; its credit default swaps, and those of other major banks and brokerages were likewise steady.

General Mills upsizes

General Mills priced an upsized $750 million of 5.2% seven-year notes at 99.774 to yield 5.239% with a spread of Treasuries plus 240 basis points.

The size was increased from $500 million.

Bookrunners were Credit Suisse Securities LLC, J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc.

Marathon pays 30 bps premium

Marathon Oil priced $1 billion of 5.9% 10-year senior notes at 99.792 to yield 5.928% with a spread of Treasuries plus 243 bps.

This was at the tight end of talk of 245 bps area, a source close to the deal said.

The issue carried around a 30 bps new issue premium, a market source said.

Citigroup Global Markets Inc., Morgan Stanley, Banc of America Securities LLC and J.P. Morgan were bookrunners.

BP brings $1 billion

BP priced $1 billion two-year floating-rate notes at par to yield three-month Libor plus 21 bps.

Lehman Brothers Inc., RBC Capital Markets and UBS Investment Bank ran the books.

Georgia Power priced $250 million of two-year floaters at par to yield three-month Libor plus 55 bps.

J.P. Morgan and Wachovia Capital Securities LLC were bookrunners.

SunTrust has to pay up

SunTrust priced $500 million 7.25% 10-year notes at 99.343 to yield 7.344% with a spread of Treasuries plus 390 bps.

Goldman Sachs & Co., Lehman Brothers, SunTrust Robinson Humphrey Inc. and Credit Suisse rant the books.

The issue carried a hefty new issue premium, one market source said, with estimates of it being more than 100 bps.

Principal Life priced $200 million in two-year extendible floaters at three-month Libor plus 30 bps.

The notes have an interest rate of Libor plus 25 bps until April 2009, when it increases to Libor plus 30 bps, with quarterly reset.

Banc of America and Wachovia were bookrunners.

AmEx ends day with $3 billion

The $3 billion issue from American Express priced late Wednesday, with full terms not available at press time.

The company priced $2 billion of 10-year notes at Treasuries plus 362.5 bps and $1 billion of 30-year notes at Treasuries plus 380 bps, a market source said.

Bookrunners were Citigroup, J.P. Morgan and Merrill Lynch.

Calendar builds for Thursday

A flood of new issues meant some were announced but won't price until Thursday.

PPG Industries, Inc. announced a two-tranche issue.

The company plans to price five and 10-year notes, with proceeds going to repay outstanding debt under a €1 billion bridge loan.

Credit Suisse, Deutsche Bank Securities Inc., J.P. Morgan and Morgan Stanley are bookrunners.

Equitable Resources announced a 10-year issue of senior notes, with the company using proceeds to repay the outstanding portion of a $1.5 billion revolving credit facility.

Bookrunners are Banc of America, Citigroup, J.P. Morgan and Lehman Brothers.

Medco Health Solutions, Inc. announced an issue of five and 10-year notes, with proceeds going to repay borrowings under a senior unsecured revolving credit facility used to fund the acquisition of PolyMedica Corp.

Citigroup, Banc of America, J.P. Morgan and Barclays Capital Inc. are bookrunners.

And an issue of junior subordinated debentures from American Electric Power Co., Inc. was announced.

The debentures will have a maturity no later than March 1, 2068.

Citigroup, Merrill Lynch, Morgan Stanley, UBS Investment Bank and Wachovia are bookrunners.

A two-tranche issue from Bunge Ltd. Finance Corp. was announced and then pulled due to market conditions.

The company planned to price senior notes in five and 10-year tranches to repay outstanding debt, according to a 424B3 Securities and Exchange Commission filing.

Bookrunners were J.P. Morgan, BNP Paribas Securities Corp., HSBC Securities and RBS Greenwich Capital.

Market 'overloaded'

An unusual number of issuers were announced but not priced Wednesday, with too many issues in the market to handle, a source said.

"The new issue market was a little swamped," he said. "We haven't seen this kind of volume for a while, so shoving 10 deals in the market is a bit of a stretch."

The market was fairly stable following the positive Fed news from Tuesday, but investment-grade indexes were still significantly wider, a source said.

"I think we're just a little overloaded right now," he said.

There will be more issuance Thursday, but it's likely it won't be much more than the issues held over from Wednesday.

A backlog from before the window for issuance open is dwindling.

"I'd be surprised if people are sitting on many more deals," a source said. "It will be interesting to see how these deals sit in the secondary [market] since there are so many of them."

Another source predicted at least a couple more issues announced Thursday, saying "we're not done for the week."

Marathon steady in trading

A trader said the new Marathon Oil 5.9% notes due 2018, which priced at 243 bps over Treasuries, were little changed when they made it to the secondary side late in the afternoon, at 244 bps bid, 243 bps offered.

Bear unseen

Back among the established issues, Bear's bonds, which had been among the most active and the big movers on both Monday and Tuesday, were nary to be found Wednesday.

But among the financial issues which were seen doing better on Wednesday were Citigroup, whose 5.125% notes due 2011 tightened more than 10 bps to the 235 bps level. JP Morgan Chase's 6% notes due 2018 tightened by 10 bps to the 220 bps level.

A trader said that "everything was unchanged" in credit-default swaps protecting the debt of various major banks and brokerage firms.

He saw Bear Stearns - whose CDS spreads had ballooned out on Monday, but which had come in to more sane, moderate levels Tuesday - unchanged Wednesday at 540 bps bid, 560 bps offered.

Everything else, the trader said, "was the same" but for Washington Mutual. The big thrift's credit protection costs were 15 bps tighter at 635 bps bid, 665 bps offered.

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