Republic Services offering upsized, bond improves after sale; financial sector trades softer

By Andrea Heisinger

New York, Aug. 31 - Republic Services, Inc. was the only reported issuer in the investment-grade bond market Monday as syndicate desks were less than full ahead of the Labor Day holiday weekend.

The sale was increased to $650 million from $500 million in 10-year notes, a market source said.

On the secondary side, Citigroup Inc. bonds dominated trading volume early in the day, although a trader in the financial sector said he was not sure why the paper moved.

He also said that the financial bond sector felt generally softer to start the week.

The new Republic Services 10-year note quickly improved by 15 to 20 basis points, a trader said. Separately, a recent bond from industrial gas maker Praxair, Inc. leveled off and remained tighter than its price.

Spreads were generally wider as Treasury yields continued to tighten. The 10-year note was in 4 bps to yield 3.41%, while the five-year note was 5 bps better.

Republic Services offers upsized deal

Republic Services sold an upsized $650 million 5.5% 10-year notes early in the day at Treasuries plus 220 bps.

The size was originally announced as $500 million, a market source said.

The notes were sold via Rule 144A.

Bank of America Merrill Lynch, Barclays Capital Inc. and J.P. Morgan Securities Inc. ran the books.

The waste management and garbage collection company is based in Phoenix.

Bond sales turn sluggish

It's expected to be a thin week for issuance as syndicate and trading desks run on thin staffing and companies hold out until after Labor Day to price bonds.

"It's a dead week," a market source said late in the day. "It's not bad, but nobody's doing anything. We could all go home."

Any further issuance for the week is unclear. There could be "a couple of things" lurking in the next couple of days, a syndicate source from a smaller desk said.

There is nothing expected to price Thursday or Friday, he added. "It will come in the next couple of days," he said.

Republic Services bond tightens

A new 5.5% bond due 2019 from Republic Services was better soon after pricing, a trader in the non-financial sector said.

It priced at 220 bps over Treasuries and was improved to 206 bps bid, 201 bps offered, he said.

Praxair note levels off

A recently priced 3.25% bond due 2015 from Praxair remained better than its pricing level Monday, but hadn't improved any from Friday, a trader said.

It was sold at Treasuries plus 85 bps, and was trading at 83 bps bid, 81 bps offered. The previous level quoted was 81 bps offered.

Citi bonds top trading

Three bonds from Citigroup were seen dominating trading volume by early afternoon, a trader said.

The bonds were a mix of short and long bonds. A recently priced 5% bond due 2014 was at the top of volume, with an 8.5% note due 2019 coming up behind.

An 8.125% bond due 2039 was also popular for the second trading day in a row.

Citigroup came in as the top underwriter for investment-grade bond offerings for both August and the year to date, according to preliminary data compiled by Prospect News.

A trader in the financial sector remarked that his side of the secondary felt "softer in general" as of early afternoon.

Sandwiched in between these notes was an outstanding bond from Allied Waste North America Inc. The 6.125% bond due 2014 was likely active due to its acquisition by Republic Services, which sold bonds Monday.

Broker, bank CDS widen

Bank and brokerage credit-default swap costs were wider late Monday after a two-day streak of being unchanged to tighter.

A trader said that bank names were 3 to 10 bps wider. Broker names were 5 to 10 bps worse, he said.

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