PPL WEM Holdings set to bring $960 million of senior notes; RBC bonds firm, Gap widens

By Cristal Cody and Sheri Kasprzak

New York, April 15 - Despite an active week, high-grade primary action dried to a trickle on Friday, with little pricing action to speak of, said market insiders.

"It's very quiet," said one sellsider said during the session.

"Not a lot to report."

Asked if the coming week will shape up to be as active as the previous week, the sellsider said he expects the flow of deals to continue to be strong throughout the summer.

"We're going to have plenty to do," he added.

Corporate trading was "definitely quiet" on Friday, a bond market source said.

Overall investment-grade Trace volume dropped more than 25% to about $8 billion, a market source said.

In the secondary market, Royal Bank of Canada's new five-year notes (Aa1/AA-/AA) priced on Tuesday firmed about 2 basis points, a trader said.

The deal from Ford Motor Co., which priced $1.5 billion of exchange-linked notes via the FUEL Trust 2011-1 on Tuesday, continued to narrow in trading, a bond source said Friday.

Other new bonds were wider, including Gap, Inc.'s new 10-year notes, sources said.

Also in trading, Alcoa Inc.'s 5.4% notes due 2021 traded flat on Friday, a trader said.

The Markit CDX Series 14 North American investment-grade index firmed 1 bp to a spread of 94 bps, according to Markit Group Ltd.

Treasuries rallied on Friday on softer economic data, sending yields down nearly 10 bps across the curve. The benchmark 10-year note yield fell 9 bps to 3.41%. The 30-year bond yield fell 8 bps to 4.47%.

"Yesterday, the employment data was on one side and the inflation data was on the other side," a bond market source said. "Today, the inflation data we got was more benign so that was the reason we went from a little better to notably better."

PPL WEM plans sale

Looking to specific deals expected for the coming week, PPL WEM Holdings plc announced plans Friday bring to market $960 million of senior notes in two tranches, said a statement from the company.

The notes will be due in 2016 and 2021, and they will be offered under Rule 144A.

Proceeds will be used to partially repay a bridge loan incurred in connection with PPL Corp.'s recent acquisition of Western Power Distribution (East Midlands) plc and WPD Midlands Holding Ltd.

PPL, based in Allentown, Pa., owns or controls 19,000 megawatts of regulated and competitive generating capacity in the U.S. and sells electricity and natural gas to customers in the U.S. and in the United Kingdom.

Alcoa flat

Alcoa's 5.4% notes due 2021, which priced at 195 bps over Treasuries on Wednesday, were mostly unchanged in the secondary, a trader said.

Alcoa Inc.'s 5.4% notes due 2021, which priced at 195 bps over Treasuries, were quoted Friday afternoon at 195 bps bid, 193 bps offered.

New York-based Alcoa is an aluminum producer.

Gap weaker

Gap's 5.95% split-rated 10-year notes (Baa3/BB+/BBB-), which priced on April 7 at a spread of Treasuries plus 245 bps, continued to stay wider in the secondary, a trader said.

The notes "widened out to 248, 245."

Another bond source saw the notes "wrapped around the new issue price."

The clothing retailer is based in San Francisco.

FUEL notes narrow

The deal from Ford Motor, which priced $1.5 billion of exchange-linked notes via the FUEL Trust 2011-1 on Tuesday, continued to narrow in trading, a bond source said Friday.

Ford Motor's FUEL Trust 2011-1 4.207% notes (Baa2/BBB-/) are due April 15, 2016 and priced at a spread of Treasuries plus 200 bps.

"Last I'm seeing is 178," the source said.

Royal Bank of Canada firms

Royal Bank of Canada sold $1.75 billion of notes including three-year floaters and five-year fixed-rate notes in a dollar-denominated deal earlier in the week.

The 2.875% notes due April 19, 2016, which priced at 73 bps over Treasuries, were seen "straddling 71, 69," a trader said.

RBC is a Toronto-based investment bank.

© 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.