Sealed Air sells split-rated bond; supply eyed in week ahead, Dell widens; new deals active

By Andrea Heisinger

New York, June 12 - It was a mostly quiet Friday in both the primary and secondary investment-grade bond markets. A new split-rated deal was priced by Sealed Air Corp. but took place mostly on the high-yield side.

Meanwhile, issuers await the coming week, which is seen by two market sources as being comparably busy relative to the past week. There will likely be a couple of busy days, followed by a lull.

The secondary market was as quiet as the primary, likely due to the main focus being on new deals. That side of the market was "not focused on much at all today," one trader said.

Recent bonds from Dell Inc. were mixed in trading, or in the case of International Game Technology, improved. Several new bonds were at the top of trading.

Spreads generally widened as Treasury yields tightened from the previous day's levels. The 10-year note was 6 basis points better at 3.79%. This was the same level at which the five-year note and 30-year bond tightened.

Sealed Air sells split-rated bond

Packaging and materials company Sealed Air priced an upsized $400 million in 7.875% bonds (Baa3/BB+) due 2017 to yield 8.25%, an informed source in the high-yield market said.

It was upsized from $250 million.

The yield came on top of the 8.25% price talk. It had a spread of Treasuries plus 470 bps, and proceeds are being used for general corporate purposes.

Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities, Morgan Stanley & Co. Inc. and RBS Securities Inc. ran the books.

Primary waits for next wave

Although a true summer slowdown may not be in effect, there have been fewer new deals hitting the market, a source said.

The coming week is looking "not too busy," he said, with "maybe a couple of really busy days like this week."

It seems to be a returning trend that the end of the week will be slow, while the heaviest issuance will come on Tuesday and Wednesday.

"That's not really new," the source said. "We were so busy for a while that it didn't matter. Now it kind of depends on tone."

There are no set deals for the coming week, the source, as well as a second market source, said. "It kind of depends on Monday," the market source said.

On the coming Wednesday, some of the larger bank names, such as JPMorgan Chase & Co., Goldman Sachs & Co. and Morgan Stanley, are expected to repay their Troubled Asset Relief Program money to the government.

The market source said he wasn't sure what this would do to the market, especially since there was so little impact when the payback news was announced at the beginning of this week.

"It will be a non event I think," he said.

Dell bonds mixed

The two-tranche sale from Dell took a surprising turn by late Friday afternoon, a trader said. Levels on the 3.375% due 2012 were at 113 bps offered. This was a major tightening from the 150 bps over Treasuries price two days earlier, prompting the trader to say "this can't be right."

The other half of the sale didn't fare as well. The 5.875% due 2019 was priced at Treasuries plus 195 bps but was trading at a wider 198 bps bid. The trader said earlier in the day he saw this bond trading at 200 bps bid.

When asked about the disparity between the two tranches, he said "there's more demand for the [20]12."

International Game bond tighter

A bond from International Game Technology was about 7 bps better than its 362.5 bps over Treasuries price, a trader said. The 7.5% due 2019 was trading at 355 bps bid, he said.

This and other recent deals were about all that was happening in the secondary on a "quiet Friday," he said. "We weren't focused on much at all today," he said, adding that if he had to name something the market was paying attention to, it was new deals.

New bonds top trading

Several bonds issued in the past few days were popular with investors as of early Friday afternoon, a source said.

The newly reopened 8.5% due 2019 from Citigroup was at the top, followed by a tranche of notes from the recent Dell sale.

Dell's 5.875% notes due 2019 were at the top. The company also priced a tranche due 2012.

International Game Technology saw its 7.5% bond due 2019 at high volume. The bond had continued to gain in the secondary following its pricing Wednesday.

A bond from American Express Co. - an 8.125% due 2019 - was popular, and priced without the backing of the Federal Deposit Insurance Corp.

American Express is among the large banks expected to pay back TARP money to the government in the coming week.

Bank, broker CDS unchanged to tighter

The credit-default swap costs for bank and brokerage names was unchanged to slightly tighter late Friday, a trader said.

Bank names were unchanged, he said, while brokerages were 3 bps better.

HCP, Prudential move big

Bonds from real estate investment trust HCP Inc. and Prudential Financial were some of the biggest movers of the day, a source said.

HCP's 6.7% bond due 2018 was more than 35 bps out from the previous week.

Prudential Financial's 5.1% bond due 2014 was more than 40 bps tighter. The insurance and financial services company, and some of its subsidiaries, has priced bonds throughout the past two weeks.

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