Praxair prices $500 million; AT&T, Sprint bonds firm on Justice Department merger block

By Andrea Heisinger and Cristal Cody

New York, Aug. 31 - One corporate high-grade bond issue priced on Wednesday, ending an otherwise quiet month in the primary market.

Praxair, Inc. sold $500 million of 10-year notes at the tightest end of price guidance.

There was, again, nothing particularly good or bad about market conditions for the day, but one source said he was "surprised to see anything price."

"This was it for the rest of the week," he said of the lack of deals lined up for the next two days.

Syndicate desks have had little in the way of volume for the week, but that's expected to change following Labor Day.

"I think we should be busy next week," one source said. "If we continue to see good [economic] numbers we're going to see deals."

AT&T, Inc.'s bonds traded tighter on Wednesday after the Justice Department moved to block its $39 billion takeover of T-Mobile USA.

Rival Sprint Nextel Corp.'s bonds also firmed on the news.

"AT&T bonds are 5 to 8 [bps] better. Sprint's longer-dated paper is up about 2½ points," a trader said. "Clearly, for Sprint it would be a positive. Despite AT&T's stock being down, people are still picking it up as a positive on the bond side."

Overall trading volume moved up nearly 30% to more than $14 billion on Wednesday.

Also in the secondary market, Praxair's new notes firmed 2 bps late afternoon.

Confidence in investment-grade bonds is better on the week, with the Markit CDX Series 16 North American high-grade index improved by 3 bps to a spread of 115 bps on Wednesday.

Financial paper traded "15 to 25 basis points better" on the day, a trader said.

Toronto-Dominion Bank's five-year notes also were stronger in the secondary market.

Investment-grade bank/brokerage credit default swaps costs tightened on Wednesday, another indicator of growing confidence, a source said.

Citi's CDS were seen 10 bps tighter at 187 bps, 197 bps, while PNC was unchanged at 70 bps, 95 bps. Brokerage/investment bank CDS costs also were tighter. Merrill Lynch's CDS costs firmed 15 bps to the 265 bps, 275 bps area. The CDS costs from Merrill Lynch came in 10 bps to 300 bps, 320 bps, while Goldman Sachs' CDS firmed 10 bps to 190 bps, 205 bps.

Treasuries were lower on the longer end of the curve as stocks rose. The 10-year note yield rose 4 bps to 2.22%, while the 30-year bond yield climbed 8 bps to 3.6%.

Praxair's 10-year notes price

Industrial gas maker Praxair sold $500 million of 3% 10-year notes (A2/A) to yield 93 bps over Treasuries, said a source away from the trade.

The notes were priced tighter than initial guidance in the 95 bps to 100 bps range, and at the low end of revised talk in the 95 bps area.

Active bookrunners were Credit Suisse Securities (USA) LLC and RBS Securities Inc.

Proceeds are being used to repay short-term debt, to fund share repurchases and for general corporate purposes.

Praxair last priced debt in a $500 million sale of 4.05% 10-year notes on March 1 at a spread of Treasuries plus 67 bps.

In the secondary market, Praxair's notes firmed to 91 bps bid, 89 bps offered, a trader said.

The company is based in Danbury, Conn.

Telecoms stronger

The Justice Department filed suit on Wednesday to prevent Dallas-based telecom giant AT&T from acquiring Deutsche Telekom AG subsidiary T-Mobile, a deal that when announced in March immediately provoked competition critics.

AT&T's stock fell, but the bonds traded 5 bps to 8 bps higher on the news. AT&T's new 3.875% notes due 2021 firmed 7 bps to 135 bps bid, 127 bps offered, the trader said.

The news also helped rival Sprint's bonds. Overland Park, Kan.-based Sprint's 8.75% bonds due 2032 rose 2.5 points to 102.25 bid, 103.25 offered, the trader said.

TD Bank tightens

Toronto-Dominion Bank's 2.5% senior medium-term notes due 2016 traded "3 basis points better on the day," a trader said.

The notes (Aaa/AA-) firmed to 103 bps bid, 93 bps offered.

Toronto-Dominion Bank sold $1.25 billion of the notes on July 7 at Treasuries plus 85 bps.

The bank and financial services company is based in Toronto.

Paul Deckelman contributed to this review

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