P&G, United Technologies, Bank of America price; John Deere to do FDIC notes; new issues tighten

By Andrea Heisinger

New York, Dec. 15 - Procter & Gamble Co., United Technologies Corp. and Bank of America Corp. all issued or reopened notes Monday in the investment-grade primary market.

The day was about evenly split between non-financial names and those issuing under the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

Those issuing under this guarantee are becoming more varied, with John Deere Capital Corp. announcing it would price an undisclosed amount of notes under the plan.

Both Procter & Gamble and United Technologies' deals were seen 15 basis points or more tighter in secondary trading. The secondary market was otherwise quiet, a trader said.

United Tech does $1.25 billion

United Technologies priced $1.25 billion of 6.125% 10-year notes at 99.838 to yield 6.145%, or Treasuries plus 360 bps.

Books were run by Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities Inc.

Price guidance for the deal evolved throughout the day, a source who worked on the offering said.

It was talked in the mid-to-high 300s in the morning, he said. Bookrunners used the company's existing bonds due 2038 and 2017 as guidance. They were at 310 bps bid and 300 bps bid, respectively, Monday.

Prior to pricing, guidance was honed to the 360 bps area, the source said. It priced in line with this level.

P&G prices $2 billion

Procter & Gamble priced $2 billion of 4.6% five-year notes at 99.978 to yield 4.604%, or Treasuries plus 310 bps.

Citigroup, Goldman Sachs & Co. and Morgan Stanley & Co., Inc. were the bookrunners.

Price guidance for the offering was similar to that of United Technologies. It started in the 300 bps area, a source close to the deal said.

"We weren't sure on the size until right before pricing," he said, adding that they were waiting to see what demand was.

"It was a very oversubscribed book," he said. "It's nice to see there are still investors interested [in buying] in this environment."

Price talk ended up in the 312.5 bps area, he said. The bonds priced at the tight end of that level.

Bank of America reopens notes

Bank of America reopened its issue of 3.125% FDIC-backed notes due 2012 to add $1.5 billion.

The reopened notes priced to yield Treasuries plus 150 bps.

With the new notes, total issuance is now $8.25 billion, including $6.75 billion priced Dec. 1 at Treasuries plus 201 bps.

Banc of America Securities LLC ran the books on the reopening.

John Deere Capital to sell FDIC notes

The financing arm of farming and heavy equipment manufacturer John Deere announced Monday it will price notes under the FDIC guarantee.

The notes could price as early as Tuesday, a market source said.

The company is able to issue these government-guaranteed notes because it fits into one of the three groups that are included in the program, a source said.

Bank holding companies, which are mostly what have issued so far, are one group.

Bookrunners for the John Deere issue are Banc of America Securities, Credit Suisse Securities and RBC Capital Markets.

FDIC reopenings continue

Morgan Stanley and JPMorgan Chase & Co. each announced terms for further reopenings of their FDIC-backed notes on Monday.

JPMorgan reopened its floating-rate notes due 2011 to add $250 million on Friday.

They were priced at 100.062 with a coupon of one-month Libor plus 76 bps.

This brings total issuance to $2.55 billion, including $500 million priced on Nov. 26, $300 million priced on Dec. 4 and $1.5 billion to settle on Dec. 16.

J.P. Morgan Securities ran the books.

Separately, Morgan Stanley reopened its FDIC-backed floaters due 2011 to add $200 million.

The notes were priced at 100.077 with a coupon of one-month Libor plus 74 bps.

With the, total issuance is now $700 million, including $500 million issued Dec. 2.

Morgan Stanley ran the books.

FDIC issues dominate

A greater diversity of financial names is beginning to issue under the FDIC guarantee, broadening further Monday with John Deere Capital's announcement it would issue these notes.

One market source confessed to being slightly sick of all of the new issues coming out under this plan. He also acknowledged it's been beneficial to those needing a source of funding.

"It's a great opportunity for companies to get money they've been lacking in the past three months," he said.

Financial names have until June to issue under the guarantee, and it's likely there will be far greater diversity in names yet to issue, he said.

"There are three types of finance companies that can issue," he said. "The big one is bank holding companies, and then there are two others."

Despite the number of these issues that have already priced and in most cases reopened multiple times, interest from investors has not appeared to wane, he said.

"A lot of these issuers - the reason they wait overnight - is to wait for interest from Asia," he said. "It's nice to see people are still interested in this when there's been so much already printed."

United Tech tightens

The new United Technology 6.125% bonds due 2019 were seen in about 15 bps late in the afternoon following pricing at 360 bps.

The bonds were seen at 346 bps bid, 342 bps offered, a trader said.

P&G bonds in sharply

The new Procter & Gamble bonds were seen in 15 bps to 35 bps after pricing at 310 bps, a trader said.

The bonds were seen at 295 bps bid, 275 bps offered, he said.

Banks, brokers mixed

Bank names were seen 10 bps tighter to 1 bps wider late Monday afternoon, a trader said.

Merrill Lynch & Co. was seen 5 bps tighter, while Goldman Sachs & Co. was around 15 bps wider.

Morgan Stanley was seen about 5 bps wider, the trader said.

GE Capital tops trading

General Electric Capital Corp. was seen at the top of trading volume early Monday afternoon as the company continued to issue under the FDIC-guaranteed debt program.

The financing arm of GE was the first issuer under this program that wasn't a bank holding company.

The company's 3% notes due 2011 were the most heavily traded.

The list of most-active bond issuers was heavy on financial names Monday, but one, Altria Group Inc., was seen in their midst.

This came as the Supreme Court ruled smokers can sue companies such as Altria over cigarettes labeled "light."

Wyeth, UTX big movers

Pharmaceutical company Wyeth was seen as a big mover late Monday as the company's 7.25% notes due 2023 were seen tightening about 60 bps. The company has been in the news in the past week over trials for its drug Prempro.

United Technologies, which issued new bonds, was seen as one company moving big in the other direction.

The company's 5.375% notes due 2017 were more than 40 bps wider.

Xerox Corp. was also seen moving out about the same amount, with its 5.5% notes due 2012 also about 40 bps wider.

Secondary quiet amid FDIC issues

The secondary market was mostly quiet Monday, a trader said, with much of the focus still on FDIC-backed notes being traded off the agency desks.

"It's getting quiet this week," he said. "There's really not much going on. Things are starting to taper off. We're getting close to the holidays, I guess."

Trading volume will likely decrease further as the week wears on, he said.

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