Williams Partners, GATX, Coca-Cola Femsa offer bonds; new deals trade firmly, GE Capital busy

By Andrea Heisinger and Cristal Cody

New York, Feb. 2 - GATX Corp., Williams Partners, LP and Coca-Cola Femsa SAB de CV each priced bonds in the high-grade bond market on Tuesday as volume increased from the start of the week.

The largest sale by far came from Williams Partners. The natural gas company sold $3.5 billion in three tranches late in the day via Rule 144A.

GATX, meanwhile, came early in the session, selling $250 million of five-year notes.

Mexico's Coca-Cola FEMSA priced an upsized $500 million of 10-year notes. The size was initially $400 million, and the sale was about five times oversubscribed, a source said.

Council of Europe Development Bank announced a sale of five-year notes that is set to go overnight and price after books close Wednesday morning, an informed source said.

Rumors of a possible bond sale from telecom company AT&T Inc. were in the air on Tuesday, two market sources said. They said talk suggests the company will sell notes to partially finance equipment improvements.

The market tone was more upbeat for the day, as sources said they were happy to be busy after a prolonged slowdown.

Activity picked up in the secondary markets on Tuesday, where traders saw the new notes from GATX, Williams Partners and Coca-Cola Femsa tighten by the end of the day.

Also, General Electric Capital Corp.'s notes due 2020 continued a second day of strong activity, according to a source.

Overall Trace high-grade trading dollar volume jumped about 27% to more than $12 billion on Tuesday, a source said

The CDX Series 13 North American high-grade index tightened 3 bps to a mid bid-asked spread level of 92 bps, another source reported.

Meanwhile, Treasuries were mostly unchanged on Tuesday.

The yield on the 10-year benchmark Treasury note firmed 1 bp to 3.64%. The yield on the 30-year Treasury bond was unchanged at 4.56%.

Williams Partners prices three tranches

Williams Partners priced a $3.5 billion bond offering in three tranches late in the afternoon, after announcing the Rule 144A sale on Jan. 19.

A $750 million tranche of 3.8% five-year notes priced at 145 bps over Treasuries.

The $1.5 billion of 5.25% 10-year notes priced Treasuries plus 162.5 bps.

The third tranche was $1.25 billion of 6.3% 30-year bonds that sold at a spread of Treasuries plus 180 bps.

Bookrunners were Barclays Capital and Citigroup Global Markets.

Proceeds will be used to fund the cash portion of a restructuring of Williams Cos. Inc. and Williams Pipeline Partners LP.

Williams Companies plans to contribute its gas pipeline and domestic midstream businesses, plus its interests in Williams Pipeline Partners. The company will be known as Williams Partners following the restructuring, which is valued at about $12 billion.

Williams Cos. and its natural gas subsidiaries are based in Tulsa, Okla.

GATX prices five-years early

Chicago-based GATX sold $250 million of 4.75% five-year senior unsecured notes by early afternoon at 255 bps over Treasuries, said a market source away from the deal.

Bank of America Merrill Lynch and Citigroup Global Markets ran the books for the rail and transportation company.

Proceeds will be used to repay commercial paper, repay $230 million of 5.125% senior notes due on April 15, to redeem or settle on the conversion of some or all of $42 million in 5% senior convertibles due in 2023 that were called for redemption on Jan. 29, and for general corporate purposes.

Coca-Cola bottler sells $500 million

Mexico-based bottler Coca-Cola Femsa priced an upsized $500 million of 4.625% 10-year notes by mid-afternoon at 105 bps over Treasuries.

The deal priced under Rule 144A.

It was heavily oversubscribed, with $2.5 billion on the books, a source on the emerging markets side said. The sale was popular with U.S. high-grade accounts that realized they could own Coca-Cola bonds with a 30 bps concession to the domestic Coca-Cola Co., which partly owns the issuer.

The bottler of Coca-Cola products for Latin American countries is based in Monterrey, Mexico.

Tone turns upward

Those on both the buy-side and sell-side of the high-grade market were more than happy to have new deals to work with on Tuesday after more than one slow week.

"It's good to be busy," a syndicate source said.

Only a small handful of deals were priced, but unlike in previous weeks, volume is expected to remain steady for the remainder of the week.

"We still have deals," a market source said. "It should stay busy through [Friday]."

It's unclear whether any large deals will make their way to the market, although two have already been priced. Procter & Gamble Co. sold $1.25 billion of short bonds on Monday, which one source said may have prompted others like Williams Partners to sell on Tuesday.

"It's definitely better than it has been," one source said of the market tone. "Last week was all headlines."

It was unclear at press time if a split-rated sale from Building Materials Corp. of America had priced as expected. A bookrunning source on the high-grade side said the sale was being done off the high-yield desk.

AT&T bond sale possible

Telecommunications giant AT&T could possibly sell bonds in the near future to pay for new plans to improve its wireless network and other equipment, a market source said on Tuesday.

He said he did not know the timing. A second source also said he had heard talk of an upcoming deal.

The company recently got a contract to provide service for the new iPad computer from Apple. It could be a sizeable offering, and could skew the spreads at which other bond sales price.

AT&T reported fourth-quarter earnings on Jan. 28 that showed both revenue and near-record subscriber growth.

The company is based in Dallas, Texas.

COE Development Bank plans deal

Council of Europe Development Bank announced a sale of five-year notes, with pricing expected on Wednesday, a source close to the deal said.

The notes will be sold via Rule 144A and are set to launch in the morning after the books close. The sale was marketed overnight to include investors in Asia, the source said.

BNP Paribas Securities, Credit Suisse Securities, HSBC Securities and Morgan Stanley are running the books.

The issuer grants loans to member states to promote social programs and is based in Paris.

GATX stronger in secondary

In secondary trading, GATX's notes due 2015 were seen tightening late Tuesday, according to sources.

GATX priced $250 million of the 4.75% five-year notes at Treasuries plus 255 bps.

One trader saw the notes at 249 bps bid, 245 bps offered.

But near the market close, the notes were seen tightening further to 248 bps bid, 243 bps offered.

Williams Partners firms

Williams Partners' new $3.5 billion of notes in five-, 10- and 30-year tranches tightened in secondary trading late Tuesday, according to sources.

The notes due 2015, which priced at Treasuries plus 145 bps, were seen at 142 bps, one trader said.

The notes maturing in 2020 were seen in the secondary tightening from the earlier price of Treasuries plus 162.5 bps to 155 bps bid, 145 bps offered, according to the trader.

Meanwhile, another source saw the notes closing at 155 bps bid, 150 bps offered.

"The last offer I saw was 148 bps."

Also, Williams Partner's last tranche, the notes due 2040 that priced at Treasuries plus 180 bps, firmed to 172 bps bid, 165 bps offered late in the day.

The tranche was seen closing at 172 bps bid, 167 bps offered, according to a source.

Coca-Cola Femsa tightens

Also in the secondary markets, Coca-Cola Femsa's notes firmed after they priced earlier on Tuesday, according to a trader.

The notes due 2020 priced at Treasuries plus 105 bps.

By the market's close, the trader was seeing the notes at 103 bps bid, 100 bps offered.

GE Capital notes tighten 10 bps

Meanwhile in the financial sector, General Electrical Capital's notes due 2020 tightened in trading on Tuesday.

The 5.5% notes firmed to 168 bps over Treasuries from 178 bps on Monday, a source reported.

The Fairfield, Conn.-based company, the financing operation of General Electric Co., priced the notes last month at Treasuries plus 180 bps.

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