Nordstrom, Praxair sell notes; Westpac plans bond sale; Capital One, Cellco trade tighter

By Andrea Heisinger and Paul Deckelman

New York, May 20 - The slowdown ahead of a long holiday weekend began Wednesday, with the limited volume of activity including bonds from Nordstrom, Inc. and Praxair Inc.

A unit of Berkshire Hathaway also reportedly did a bond sale, a market source said, although terms were not available at press time.

New Zealand-based Westpac Securities NZ Ltd. is planning a sale of three-year notes, a source close to the deal said late in the day, with pricing expected Thursday.

The market was neither good nor bad, the source said, with the downturn in issuance a result of the coming holiday.

In the secondary realm on Wednesday, a market source said the CDX Series 12 North American high-grade index narrowed by 1 basis point to a mid bid-asked spread level of 144 bps.

Advancing issues led decliners for a second straight session, topping them by a better-than three-to-two ratio.

Overall market activity, reflected in dollar volumes, rose by 6% from Tuesday's levels.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year government note was 5 bps tighter at 3.19%.

Traders said new issues continued to mostly firm in secondary activity, including Wednesday's offering by Nordstrom, and Tuesday's deals from such diverse issuers as Capital One Financial Corp. and Cellco Partnership - i.e. Verizon Wireless Capital LLC.

Praxair sells one-year floater

Industrial gas provider Praxair sold $500 million of one-year floating-rate notes early Wednesday at par to yield three-month Libor plus 9 bps.

The sale was announced late and priced soon after, a source close to it said.

Proceeds are going to repay short-term debt and for general corporate purposes.

The company, based in Danbury, Conn., tapped Citigroup Global Markets and RBS Securities as bookrunners.

There was "not really" any price guidance, the source said. "We knew it was going to be low-single-digits," he said, due to the one-year maturity.

"The market knew it was coming and there was actually a lot of reverse inquiry." The company's outstanding commercial paper was trading at the "Libor minus double-digits" level, he said.

"It's a good name. People recognize it."

Nordstrom upsizes sale

Retailer Nordstrom increased the size of its offering of senior unsecured notes that priced early Wednesday, a source said.

The final amount was $400 million, which was a $100 million increase from the original $300 million.

The 6.75% five-year notes sold at Treasuries plus 475 bps.

The Seattle-based company is using proceeds to retire outstanding debt.

Banc of America Securities and J.P. Morgan Securities were bookrunners.

Westpac Securities to offer notes

Auckland-based Westpac Securities NZ is planning a sale of three-year notes for Thursday, a source close to the deal said.

The notes will be sold via Rule 144A.

"Books are building for tomorrow," the source said late Wednesday. "We want to get Asia involved."

A size has not been decided.

Barclays Capital and Citigroup are bookrunners.

Slowdown in effect

There should be minimal issuance for the rest of the week, sources said by late Wednesday. There is the Westpac deal on tap for Thursday, but it is the only solid offering on the calendar.

Wednesday wasn't particularly good or bad in terms of market tone, one source said.

"It was kind of trading down a little bit," he said. "Things are starting to stand down a little, not because of the market but because of the holiday."

Another market source said "tomorrow will be it. I will be surprised if anything comes Friday."

Nordstrom tightens up

When the new Nordstrom 6.75% notes due 2014 were freed for secondary dealings, the department store operator's bonds tightened to a spread over comparable Treasury issues of 450 bps bid, 445 bps offered. The $400 million issue, upsized from $300 million, had priced earlier in the session at 475 bps over to yield 6.837%.

Verizon very firm

The trader also saw Verizon Wireless Capital LLC's new bonds having tightened impressively from the levels at which they had come to market.

He saw that $2.75 billion tranche of 3¾% notes due 2011 as having narrowed to a spread of 215 bps bid, 210 bps offered. That was well in from the 290 bps over level at which the New York-based telecommunications company's unit had priced those bonds on Tuesday to yield 3.791%.

Another Tuesday deal - for Allentown, Pa.-based electric utility operator PPL Electric Utilities Corp. - was also seen tighter on the session. Its 6.25% bonds due 2039 priced Tuesday at 210 bps lover to yield 6.295%. On Wednesday, those bonds had come in to 200 bps bid, 195 bps offered.

Kellogg firms smartly

Monday's offering from Kellogg Co., in the words of the company's iconic cartoon mascot "Tony The Tiger," was trading "GRRRRRRRREAT!," with the $750 million of new 4.45% notes due 2016 seen by a market source trading at a spread of 130 bps over. The Battle Creek, Mich.-based cereal producer's $750 million of bonds had priced at 180 bps over to yield 4.494%

Bank bonds tighten

In the financials sector, a trader saw tighter trading levels for several recently priced bank-bond deals.

He saw Capital One's $1 billion of 7.375% notes due 2014 at 490 bps bid, 480 bps offered, in from 505 bps bid, 495 bps offered in Tuesday's initial aftermarket trading, and in further still from the 540 bps level at which those bonds had priced on Tuesday to yield 7.494%.

He also saw Barclays Bank plc's $2 billion of new 6.75% notes due 2019 trading at 340 bps bid, 330 bps offered. Those bonds had priced on Tuesday at 355 bps over to yield 6.78%, and had tightened later Tuesday to 345 bps bid, 340 bps offered.

He said the new Principal Financial Group, Inc. 7.875% notes due 2014 had tightened to 525 bps bid., 515 bps offered, from the 577.2 bps level at which the $400 million of bonds had priced on Tuesday. The other half of that two-part offering - the company's $350 million of 8.875% notes due 2019 - firmed to 540 bps bid, 530 bps offered from the 563.6 bps over spread at which it had priced to yield 8.875%.

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Bank, broker CDS costs lower

In the credit-default swaps market, reflecting continued improvement of investor sentiment about the fate of the banking industry, a trader said that CDS costs to protect holders of big-bank paper against a possible default, as well as investment-bank CDS costs, remained 10 bps to 20 bps tighter across the board.

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