Morgan Stanley, Exelon unit, PNC, GE Capital among sellers; Newmont, Cenovus gain in trading

By Andrea Heisinger and Paul Deckelman

New York, Sept. 16 - Export Development Canada, Morgan Stanley, Exelon Generation Co. LLC, PNC Funding Corp., General Electric Capital Corp. and Tennessee Valley Authority each sold bonds on a Wednesday a syndicate source called "cut and dry."

None of the day's deals were as drawn out or oversized as the previous day's bombardment of the market.

Export Development Canada announced and sold its bonds early in the day, pricing $1 billion of short three-year notes.

Bonds from financial names otherwise dominated the day. Morgan Stanley announced and sold $3 billion of 10-year notes in short order. GE Capital followed with a sale of $600 million in six-year senior notes that was done quickly. PNC Funding also did a small sale of $500 million in six-year notes.

One of the day's largest sales came from Exelon Generation, which upsized its sale from $1.2 billion to $1.5 billion of notes in 10-and 30-year tranches.

TVA also priced $1.5 billion, but of 30-year global bonds sold jointly by agency and high-grade syndicate desks.

Thursday's deals should be less than priced Wednesday, due to a diminished supply of new offerings waiting in the wings, sources said.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 12 North American high-grade index tightened by 6 basis points to a mid bid-asked spread level of 98 bps.

Advancing issues were seen leading decliners Wednesday by around a 10-to-9 margin, a little improved from the narrow edge seen Tuesday - just a relative handful of issues, numbering perhaps a couple of dozen out of more than several thousand total.

Overall market activity, reflected in dollar-volume totals, rose around 15% from Tuesday's pace.

Spreads in general were seen a bit narrower, in line with modestly higher Treasury yields; for instance, the yield on the benchmark 10-year government notes widened by 2 bps on Wednesday to 3.47%.

Unlike Tuesday's session, in which the heavy pace of new-issue activity completely drove out secondary dealings, there was some aftermarket activity Wednesday. Among the gainers were a pair of industrial deals which had priced Tuesday, for Newmont Mining Corp. and Cenovus Energy Inc.

Among the financials, there was some trading - but little real spread movement - in the giant-sized deals for J.P. Morgan Chase & Co. and Morgan Stanley & Co.

Exelon sells two tranches

Exelon Generation priced an upsized $1.5 billion of senior notes in two tranches.

The size was initially $1.2 billion, a source away from the sale said.

The $600 million of 5.2% 10-year notes priced at Treasuries plus 175 bps.

A $900 million tranche of 6.25% 30-year notes priced at a spread of Treasuries plus 200 bps.

The notes were each sold in line with guidance of the 175 bps area for the 10-year notes, and the 200 bps area for the 30-year notes, a source close to the sale said.

Bookrunners for the 10-year notes were Barclays Capital, J.P. Morgan Securities, Morgan Stanley and Credit Suisse Securities.

Barclays, J.P. Morgan, Morgan Stanley, Goldman Sachs and UBS ran the books for the 30-year notes.

Proceeds will be used to finance the purchase of 6.95% notes due 201 and for general corporate purposes including the distribution to parent company Exelon Corp. to fund a portion of the purchase of 6.75% notes due 2011 that have been tendered.

The electric subsidiary of Exelon is based in Kennett Square, Pa.

GECC does small sale

GE Capital priced $600 million in 4.375% six-year notes in a quick sale at Treasuries plus 200 bps.

They are not guaranteed by the Federal Deposit Insurance Corp. The company has indicated it is moving away from the Temporary Liquidity Guarantee Program, but has continued to reopen old sales done under the guarantee.

The notes "came at a good level," a source away from the deal said. He added that it was "surprising they didn't just open another FDIC [bond]."

Although the company decided it would no longer tap the government's Temporary Liquidity Guarantee Program, that didn't stop it from recently reopening old issues. Citigroup units did a $5 billion sale of FDIC-backed notes on Tuesday - a move that surprised other syndicate desks.

Bookrunners for the GE Capital sale were Barclays Capital, HSBC Securities and Morgan Stanley.

The funding arm of General Electric is based in Fairfield, Conn.

Market stays positive

The tone remained upbeat by the close of Wednesday's market, a syndicate source said.

"We've had a solid week," he said. "We have two days [left], but we'll probably only see stuff tomorrow."

"I think a lot [of issuers] came in off of yesterday's success."

Tuesday saw one of the largest dollar amounts of bonds ever issued in the investment-grade market. It was largely due to several multi-billion-dollar sales being priced.

"We saw this coming," a market source said, referring to the prediction of heavy issuance after Labor Day. "We should see more in coming weeks leading into the holidays."

Thursday's issuance will likely taper off from the volume of the top half of the week.

"I think supply is coming down," the syndicate source said. "That's just my guess, though."

Others said they had only a small amount remaining on the calendar for the remainder of the week.

PNC prices $500 million

PNC Funding priced $500 million of 4.25% six-year senior notes at Treasuries plus 185 bps.

Goldman Sachs & Co. and J.P. Morgan Securities ran the books.

The deal is guaranteed by PNC Financial Services Group, Inc.

Proceeds will be used for general corporate purposes.

The financial services company is based in Pittsburgh, Pa.

Morgan Stanley offers $3 billion

Morgan Stanley priced $3 billion of 5.625% 10-year notes relatively quickly at Treasuries plus 225 bps, a market source said.

Bookrunner was Morgan Stanley.

The financial services company is based in New York City.

EDC sells bonds early

Export Development Canada priced $1 billion of 1.75% three-year notes early in the day at Treasuries plus 28.3 bps.

BNP Paribas Securities, Credit Suisse Securities, HSBC Securities and RBC Capital Markets were bookrunners.

The Canadian government's export credit agency is based in Ottawa, Ont.

TVA prices $1.5 billion

Tennessee Valley Authority sold $1.5 billion 5.25% 30-year notes at Treasuries plus 105 bps, an informed high-grade source said.

The sale was done jointly off the agency and high-grade syndicate desks, she said.

Bookrunners were Bank of America Merrill Lynch and Barclays Capital.

The federally-owned electric and economic development provider is based in Knoxville, Tenn.

New Newmont bonds glitter

A trader saw Newmont Mining's 5.125% notes due 2019 having firmed to 166 bps bid, 161 bps offered, in from the 175 bps spread over comparable Treasuries at which the $900 million issue priced on Tuesday.

He saw the Greenwood Village, Colo.-based gold mining company's $1.1 billion of 6.25% bonds due 2039 at 193 bps bid, 188 bps offered, versus the 210 bps spread at pricing.

Cenovus seen tighter

Doing even better in the secondary was Cenovus Energy's three-part deal. A trader saw the Calgary, Alta.-based company's 4.50% notes due 2014 having come in to 165 bps bid, 158 bps offered, versus the 212.5 bps spread at which that $800 million of bonds priced on Tuesday.

Its $1.3 billion of 5.70% notes due 2019 traded at 194 bps bid, 190 bps offered, versus 225 bps over at Tuesday's pricing.

And its $1.4 billion of 6.75% bonds due 2039 narrowed to 215 bps bid, 210 bps offered from 250 bps over at the pricing.

New financials mostly little changed

Among the financial issues, a trader said that there was "not a lot of movement" in Morgan Stanley's new 5.625% notes due 2019. He saw the $3 billion of new paper straddling its 225 bps over spread at pricing, quoting the bonds at 226 bps bid, 224 bps offered.

Tuesday's $1.5 billion offering from J.P. Morgan Chase - upsized from $1 billion initially - was seen Wednesday at 136 bps bid, 135 bps offered, virtually unmoved from its spread at pricing of 135 bps.

However, a market source did see considerable tightening in Prudential Financial Inc.'s 4.75% notes due 2015. The Newark, N.J.-based insurance and financial products company's $900 million issue was quoted Wednesday at a spread of 178 bps over - a 40 bps tightening from the levels seen Tuesday, and in even further from the 250 bps over at which the issue priced a week ago.

Bank, brokerage CDS costs keep narrowing

Also among the financials, a trader who follows the credit default swaps market said that the cost of protecting holders of big-bank debt against a possible event of default were between 5 bps and 30 bps tighter on Wednesday, after having been 3 bps to 15 bps tighter on Tuesday.

He said that Citigroup's CDS cost continued to narrow markedly, coming in by 30 bps to 165 bps bid, 155 bps offered.

The trader said the CDS costs for major brokerage company paper was 10 bps to 15 bps tighter on Wednesday, versus 5 bps to 10 bps tighter on Tuesday.

He said that Morgan Stanley's CDS cost was about 15 bps tighter, at 125 bps bid, 135 bps offered.

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