Duke Energy, Florida Power/Progress, Rabobank offer bonds; health names trade mixed post-bill

By Andrea Heisinger

New York, March 22 - Duke Energy Corp., Florida Power Corp. d/b/a Progress Energy Florida Inc. and Rabobank Nederland each priced small issues of bonds on a sleepy Monday.

The Duke Energy sale was $450 million of five-year notes while Florida Power priced $600 million split-between tranches of 10-year and 30-year maturities.

On the sovereign side, Rabobank reopened a deal of five-year notes by early afternoon to add $500 million. It priced about the same time as the Florida Power sale.

The tone of the investment-grade market was uncertain to start the week following a House vote to pass health care reform on Sunday night and an upcoming push to get it through the Senate.

There were also renewed worries about the economy of Greece after Germany's chancellor said they would not be coming through with an aid package for the country's stifling debt.

The secondary side of the market was quiet, with trading volume "on the light side," a source said.

New deals from Florida Power d/b/a Progress Energy and Duke Energy were mostly unchanged once hitting the secondary.

The Duke five-year note was at first slightly tighter, a trader said, but was unseen in trading about an hour later.

A recently reopened bond from Goldman Sachs Group Inc. was trading actively and was slightly tighter from its pricing level on Friday.

Both bonds and stocks were "trading up" on the passage of the health care reform bill, a source said in the afternoon.

Changes were seen in a couple of health-related names, but they were mixed.

Some attention may be taken away from trading in corporate bonds in the coming days as it is "a big week for taxable munis," a source said.

Florida Power prices two tranches

Florida Power Corp. d/b/a Progress Energy Florida priced $600 million of first mortgage bonds (A1/A-/A+) in two tranches, according to an FWP filing with the Securities and Exchange Commission.

The $250 million of 4.55% 10-year notes priced at a spread of 90 bps over Treasuries.

A $350 million tranche of 5.65% 30-year bonds priced to yield Treasuries plus 110 bps.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities and Mitsubishi UFJ Securities.

Proceeds are being used to retire a $300 million balance of 4.5% mortgage bonds due June 1, to repay the balance of notes payable to affiliate companies and for general corporate purposes.

The electric subsidiary of Progress Energy Inc. is based in Raleigh, N.C.

Duke Energy sells five-years

Electricity provider Duke Energy priced $450 million of 3.35% five-year senior unsecured notes (Baa2/BBB+) at 95 bps over Treasuries.

Credit Suisse Securities, SunTrust Robinson Humphrey and UBS Investment Bank were bookrunners.

The proceeds are being used to repay borrowings under a master credit facility and for general corporate purposes.

The company is based in Charlotte, N.C.

Primary lacks excitement

Utilities made up the bulk off issuance in the high-grade market for the day as some companies decided to wait until the market tone brightened a little.

That could happen on Tuesday or Wednesday, provided President Obama signs the health care bill and it passes the Senate.

One syndicate source said it did not look like a busy week ahead and that his desk was working on "four to five trades" in financials, banks, retail and industrial consumer categories.

Others also said they had bond deals on tap for the week.

"I think we'll see one to two things every day," the syndicate source said.

A market source said issuers were looking at "how things shake out" before committing to tapping the market on a certain day.

"If it feels good, we'll have a few [sales] on a day, I think," he said.

Rabobank taps market to add $500 million

Sovereign issuer Rabobank Nederland reopened its issue of 3.2% five-year notes (Aaa/AAA/AAA) early in the day to add $500 million, an informed source said.

The notes priced to yield Treasuries plus 90 bps.

Total issuance is now $1.5 billion, including $1 billion sold on March 4 at 95 bps over Treasuries.

Barclays Capital, Citigroup Global Markets and Morgan Stanley & Co. were bookrunners for Monday's sale.

The food and agriculture financing institution is based in Utrecht, the Netherlands.

Florida Power/Progress bonds unchanged

Two new notes from Florida Power d/b/a Progress Energy were trading mostly unmoved from where they priced to slightly tighter, a trader in the industrial sector said.

The 4.55% note due 2020 was in a little from its 90 bps over Treasuries price, trading at 89 bps bid, 87 bps offered. The bond later gave up some of its gains on the bid side, with another trader quoting them at a bid of 91 bps and offer of 87 bps.

A 5.65% tranche due 2040 was unchanged from its 110 bps over Treasuries price. It was quoted at a bid of 110 bps and offer of 107 bps. This bond was also quoted wider later, trading at 113 bps bid, 108 bps offered.

Duke Energy bond tightens some

The new bond from electricity provider Duke Energy was trading mostly unchanged to a little tighter in the secondary soon after pricing, a source said.

The 2.25% note due 2015 was sold at Treasuries plus 95 bps and was trading at 93 bps bid, 92 bps offered.

Later, a trader said the bonds were not seen changing hands and had mostly disappeared.

Financials monopolize most-traded

An outstanding 9.85% bond due 2019 from steelmaker ArcelorMittal led high-grade trading volume by early afternoon. It was trading at 228 bps.

The company was in the news after being put on the "buy" list by Goldman Sachs on an improved outlook for the company in relation to its competitors.

Many other bonds trading at high volume were from financial names. A 5.375% note due 2020 reopened on March 19 by Goldman Sachs Group Inc. was seeing heavy trading, a source said.

It was quoted at 152 bps, which was much tighter than its sale price of 175 bps over Treasuries.

Other notes from Bank of America Corp. and General Electric Capital Corp. remained popular from the previous week when bank bonds zoomed tighter, but then lost some of those gains by Friday.

Perennial investor favorite Cisco Systems Inc. saw its 4.45% note due 2020 among the most popular bonds.

Health names mixed in secondary

The House's passage of the health care bill did not help or hurt companies in that sector in general, a trader said late in the day, but it did sway some of them.

Hospital and clinic operator HCA Inc. bonds were "heard about 4 to 8 bps tighter," a source said.

The same source said that Novartis bonds were about 2 to 3 bps wider on the news.

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