Comcast, KfW, Federal Realty sell bonds, Nomura plans offer; Trace slips as trading active

By Andrea Heisinger and Cristal Cody

New York, Feb. 24 - Comcast Corp., KfW, CBL & Associates Properties, Inc. and Federal Realty Investment Trust were among those issuing on a busy Wednesday in the high-grade bond market.

New deals have not been so plentiful in weeks, with one source saying he was "elated" that there were deals to monitor and work on.

Large industrial offerings kept coming, with Comcast pricing a benchmark $2.4 billion in two tranches by late afternoon. The sale was composed of $1.4 billion of 10-year notes and $1 billion of 30-year bonds.

The telecommunications company had to revise and widen price talk from initial whispers, a source said.

Federal Realty sold a relatively small $150 million of 10-year notes in a quick deal.

KfW was the first to price its $3 billion deal of five-year notes, after it went overnight to allow those in Asia and Europe in on the books.

A reopening of cumulative preferred stock was done by CBL & Associates Properties, which added 6.3 million shares, for a total of 13.3 million.

A market source said that the European Investment Bank priced $1.25 billion of two-year global notes under Rule 144A, but terms were not available at press time. Credit Suisse Securities, Morgan Stanley & Co. and RBC Capital Markets were the bookrunners, the source said.

Nomura Holdings, Inc. announced a sale of senior notes of five-year and 10-year tranches. The deal is expected to price on Thursday, a source said.

In addition to Nomura, there could be "one or two things" on tap for Thursday, a market source said.

Although Overall Trace volume slipped about 7% to just under $14 billion, according to a source, high-grade trading remained busy on Wednesday, according to sources.

"It's been very active," another trader said.

For example, paper from Bank of America Corp. and General Electric Capital Corp. was active on the day. In addition, in secondary trading, the new notes from Comcast firmed in trading, while Comcast's existing notes widened, according to a source.

Meanwhile on Wednesday, Treasuries were slightly weaker. The yield on the 10-year Treasury note eased 1 basis point to 3.69%, while the yield on the 30-year Treasury bond ended at 4.64% from 4.63% the previous day.

In addition, the CDX Series 13 North American high-grade index tightened 1 bp to a mid bid-asked spread level of 93 bps, according to a source.

Comcast sells two tranches

Comcast sold $2.4 billion of senior unsecured notes (Baa1/BBB+/BBB+) in two tranches late in the day, a market source connected to the sale said.

The $1.4 billion of 5.15% 10-year notes priced at a spread of Treasuries plus 147 bps.

A $1 billion tranche of 6.4% 30-year bonds sold to yield 180 bps over Treasuries.

Both tranches priced tight to talk, but only after guidance was widened by 10 bps, a source said. The 10-year notes were initially whispered in the 140 bps area, and then revised to the 150 bps area. Talk on the 30-year bonds was similarly changed, with initial guidance in the 170 bps area, and then changed to the 180 bps area.

The source said the widening was the opposite of what happened with the United Technologies Corp. sale the day before. Talk on that sale tightened from initial guidance.

Deutsche Bank Securities, Mitsubishi UFJ Securities, RBS Securities and UBS Investment Bank ran the books.

Proceeds are being used to fund a portion due to General Electric Co. for the acquisition of NBC Universal Inc. and to repay its 5.45% notes due in November.

The telecommunications company is based in Philadelphia.

KfW sells $3 billion

German development bank KfW sold $3 billion of 2.625% five-year global notes (Aaa/AAA/AAA) early in the day at 40 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

The sale went overnight after being announced early on Tuesday, a source said. The deal was talked at 7 bps over mid-swaps on Wednesday morning.

Citigroup Global Markets, Deutsche Bank Securities and RBC Capital Markets ran the books.

The German government-owned development bank is based in Frankfurt.

Federal Realty prices small deal

Federal Realty Investment Trust priced $150 million of 5.9% 10-year senior unsecured notes (Baa1/BBB+/BBB+) by early in the afternoon at Treasuries plus 225 bps, a source close to the sale said.

Bank of America Merrill Lynch and Wells Fargo Securities ran the books.

Proceeds are being used to fund potential acquisition opportunities and a redevelopment pipeline, reduce amounts under a $250 million term loan and for general corporate purposes.

The real estate investment trust of mixed-use and retail properties is based in Rockville, Maryland.

Market happy for new deals

It was a somewhat upbeat day in the investment-grade market, with more deals flowing in and more to come, sources said.

One syndicate source said he didn't have much of a sense if there had been any changes in the tone, as he "had his head down" working on other deals and didn't pay attention. Another source reported that there "wasn't much going on other than Comcast."

The two-tranche sale from Comcast was indeed the talk of the market - but for some, it was pricing shifts that made it interesting.

Talk was widened between when the deal was announced and when it launched, a syndicate source said.

He said there was some trouble in the composition of the books that may have led to the 10 bps shift upward in the spread.

"I was hearing that there wasn't a lot of real money on the books," he said. "It was just a lot of hedge funds and other stuff like that - not a lot of quality."

All eyes will be on the bonds on Thursday once they hit the secondary, as they were priced too late to free on Wednesday.

"I haven't seen anything in the gray," one source said. "It will be interesting to see where they go."

CBL reopens preferreds

Real estate investment trust CBL & Associates Properties reopened its 7.375% perpetual cumulative redeemable preferred shares to add $157.5 million, or 6.3 million shares, a source close to the sale said.

Total issuance is now 13.3 million shares, or $332.5 million.

They priced at $20.3 versus par of $25, with a $25 liquidation price per share.

Bookrunners were Bank of America Merrill Lynch and Wells Fargo Securities.

Proceeds are being contributed to the operating partnership in exchange for unite equal to depository shares. The operating partnership will use the proceeds to reduce amounts understanding under credit facilities and for general corporate partnerships.

The issuer is based in Chattanooga, Tenn.

Nomura plans two-tranche sale

Nomura Holdings announced a sale of senior notes (Baa2/BBB+) in two tranches, according to a 424B3 filing with the Securities and Exchange Commission.

Pricing is expected on Thursday, a source said.

The deal will have tranches due in 2015 and 2020. The five-year notes have initial price whispers of the 262.5 bps area, the source said, while the 10-year notes are talked at the 287.5 bps area.

Proceeds are being used for general corporate purposes.

Nomura Securities is bookrunner.

The financial services company is based in Tokyo, Japan.

Retail investors active

Some of the names active on the day included paper from Alcoa, Inc., Bank of America, Caterpillar Inc. and Prudential Financial, Inc., a source said.

"We see retail investors receiving money from calls on agencies, calls on corporates - a steady flow of money to be spent on corporate bonds from retail investors," the source said.

Meanwhile, Wednesday was a "very active day," the source said. "In general, most of the names I've seen have been tightening. Bank of America - I've definitely moved a lot of that paper today."

For instance, the Charlotte, N.C.-based bank's 7.625% notes due 2019 moved out to 220 bps from 213 bps the previous day, according to a source.

Also, General Electric Capital's 6% notes due 2019 were among the most active of the day and seen earlier at 158 bps.

And, Fairfield, Conn.-based GE Capital's 0.514% notes due 2014 tightened 15 bps to 140 bps over Treasuries, according to a source.

Comcast firms

Elsewhere in the secondary, Comcast's two new tranches tightened in secondary trading after pricing earlier on Wednesday, sources said.

The $1.4 billion of notes due 2020, which priced at Treasuries plus 147 bps, in trading were quoted at 145 bps bid, according to a trader.

Later in the day, the notes firmed to 144 bps bid, 139 bps offered.

Also, Comcast priced $1 billion of notes due 2040 at Treasuries plus 180 bps on Wednesday. In the secondary, the notes firmed to 177 bps bid, 173 bps offered, a trader said.

"Looks like lots of action in the new issues."

Meanwhile, Comcast's outstanding bonds weakened on the day.

For example, the 5.70% notes maturing in 2019 "looks to be 7-10 bps wider," a trader said.

The notes were seen earlier at 140 bps over Treasuries.

Also, Comcast's existing 6.55% notes due 2039 were quoted at 169 bps on Wednesday.

"Looks like secondaries in CMCSA were wider by about 5 bps," the trader said.

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