Softer tone at open leads high-grade issuers to stand down; Anheuser-Busch bonds trade up

By Aleesia Forni and Andrea Heisinger

New York, July 12 - Issuance dried up in the high-grade primary market Thursday following the huge four-part deal from Anheuser-Busch InBev Worldwide Inc. the previous day.

That deal totaled $7.5 billion and was about four times oversubscribed as investors scrambled for the highly-rated bonds.

The bonds are "not doing too bad" in the secondary, a market source commented.

The source saw the bonds trading up 3 bps to 5 bps, while another source saw the bonds trading 4 to 10 bps tighter near the session's close.

In addition to letting the market settle and watching how recent deals are performing in the secondary side of the market, there were some negative headlines on Thursday.

Wells Fargo & Co. settled a U.S. Department of Justice suit that independent brokers had discriminated against people in its wholesale mortgage lending operation.

Equities were down on the day, although the decline likely did not have much impact on high-grade bond supply.

"I don't know how many we had ready to go anyway," a source said. "I think people are just waiting for next week or in [earnings] blackout right now."

There were a couple of issuers looking at the market in the morning but they opted to stand down, a syndicate source said following the close.

"It was a softer tone [this morning]," he said. "We knew this week was going to be frontloaded."

Primerica active

The recent issue from Primerica Inc. was among the day's most actively traded deals, according to a market source.

The company's new notes due 2022 traded at 302 bps bid, 298 bps offered during the New York session.

The Duluth, Ga.-based life insurance and financial products provider priced an upsized $375 million issue of 4.75% 10-year senior notes on Wednesday at a spread of Treasuries plus 325 basis points.

Anheuser tightens

Wednesday's four-tranche deal from Anheuser-Busch also tightened in the secondary, market sources said.

The $1.5 billion tranche of 0.8% three-year notes traded at 46 bps bid, 41 bps offered near the end of the session, 4 bps tighter than its issue price.

The $2 billion of 1.375% five-year notes were seen at 75 bps bid, 71 bps offered after Wednesday's pricing at 80 bps over Treasuries.

The $3 billion of 2.5% 10-year notes traded at 95 bps bid, 93 bps offered. The tranche priced at a spread of 105 bps over Treasuries.

A $1 billion tranche of 3.75% 30-year bonds were seen trading at 112 bps bid, 107 bps offered near the day's close. The bonds sold at a spread of Treasuries plus 120 bps.

The beer brewer is based in Leuven, Belgium.

Goldman Sachs firms

In other trading, Goldman Sachs' 30-year bond due 2037 closed the session at 425 bps bid, 4 bps tighter from Wednesday's levels.

Goldman priced the $2.5 billion 6.75% bond at 190 bps over Treasuries in September 2007.

Bank of America widens

Bank of America's 7.375% five-year notes widened 20 bps to 281 bps bid during Thursday's session, according to a market source.

The bank priced $3 billion notes due 2014 at Treasuries plus 537.5 bps on May 8, 2009.

© 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.