Prudential, Viacom join utilities in primary; Viacom weighs on sector in secondary; Westar firms

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 12 - Prudential Financial Inc. and Viacom Inc. were among the issuers kicking off what is expected to be another busy week for the high-grade primary market, sources said on Monday.

Prudential Financial priced a three-part offering of $1.05 billion notes, according to a market source.

The deal included $350 million of floating-rate notes due 2018 at a spread of Libor plus 78 basis points.

There were also two fixed-rate tranches, which both priced at the tight end of talk. The $350 million 2.3% notes due 2018 priced with a spread of Treasuries plus 95 bps, while the $350 million of notes due 2043 sold with a spread of Treasuries plus 140 bps.

Monday's primary also saw a $3 billion offering of notes in three tranches from Viacom, an informed source said.

The company priced $500 million of 2.5% notes due 2018 at a spread of 125 bps over Treasuries and a $1.25 billion tranche of 4.25% notes due 2023 with a spread of 178 bps over Treasuries.

A $1.25 billion tranche of 30-year 5.85% bonds sold at Treasuries plus 220 bps.

A number of utility companies entered the primary during the session to refinance existing debt, market sources said.

Calgary, Alta.-based Cenovus Energy Inc. priced $800 million of notes in two parts, according to a market source, with both coming in at the tight end of talk.

The deal included $450 million of 3.8% 10-year notes priced at Treasuries plus 152 basis points.

There was also a $350 million issue of 5.2% 30-year bonds sold with a spread of Treasuries plus 130 bps.

Virginia Electric & Power Co. priced $585 million of 4.65% 30-year series D senior notes due Aug. 15, 2043 at Treasuries plus 95 basis points, according to a filing with the Securities and Exchange Commission.

The primary also saw Commonwealth Edison Co. price $350 million of 4.6% 30-year first mortgage bonds at a spread of Treasuries plus 92 bps.

There was also a $250 million offering of 4.625% first mortgage bonds from Westar Energy Inc.

The 30-year bonds sold with a spread of 93 bps over Treasuries on Monday.

Meanwhile, Georgia Power Co. priced $200 million of series three-year floating-rate senior notes at par to yield Libor plus 40 basis points.

Sierra Pacific Power Co., a subsidiary of NV Energy Inc., also hit the primary, selling $250 million of 3.375% 10-year general and refunding mortgage notes with a spread of Treasuries plus 80 bps, according to an informed source.

The preferred stock market got the week started off with a new issue from Integrys Energy Group Inc. that was doing rather well, according to a trader.

"There have been some decent trades in it," a trader said of the $25-par fixed-to-floating rate junior subordinated notes due 2073.

The issue ended up coming at 6% and was upsized to $400 million.

Later in the session, a market source quoted the issue at $24.70 bid, $24.77 offered.

New issues mostly tighter

High-grade bonds in the technology, media and telecommunications sector traded a "touch weaker on the back of the new deal" from Viacom, a trader said.

Viacom's notes due 2023 tightened 7 bps to 171 bps bid, 168 bps offered going out on Monday, the trader said.

The tranche of 30-year bonds firmed more than 10 bps to 209 bps bid, 204 bps offered.

Sierra Pacific Power's notes due 2023 priced earlier in the day traded flat on the bid side at 80 bps bid, 77 bps offered, a trader at another desk said.

Westar Energy's new 30-year first mortgage bonds firmed 2 bps to 91 bps bid, 90 bps offered, according to a trader.

In other new issue secondary activity, Prudential's notes due 2018 firmed to 94 bps bid, 90 bps offered, a source said late afternoon. The tranche of 30-year bonds were seen at 140 bps bid, 135 bps offered.

The investment-grade secondary market otherwise was quiet during the session, according to sources.

"Not seeing a ton of activity today," a trader said.

The Markit CDX Series 20 North American Investment Grade index ended 1 bp higher from Friday at a spread of 76 bps.

Viacom sells in three parts

The day's largest deal came from Viacom, as the company priced $3 billion of notes in three tranches on Monday, an informed source said.

The company priced $500 million of 2.5% notes due 2018 at a spread of 125 basis points over Treasuries.

There was also $1.25 billion of 4.25% notes due 2023 priced with a spread of 178 bps over Treasuries.

Finally, a $1.25 billion tranche of 30-year 5.85% bonds sold at Treasuries plus 220 bps.

Proceeds will be used for general corporate purposes.

The entertainment company is based in New York City.

Prudential sells $1.05 billion

Prudential Financial priced on Monday a three-part offering of $1.05 billion notes, according to a market source.

Both fixed-rate tranches priced at the tight end of talk.

The company sold $350 million of floating-rate notes due 2018 at a spread of Libor plus 78 basis points.

There was also $350 million of notes due 2018 priced with a spread of Treasuries plus 95 bps.

A third tranche was $350 million of notes due 2043 sold with a spread of Treasuries plus 140 bps.

Prudential is a Newark, N.J.-based financial services company.

Cenovus prices tight

Leading the slew of utilities bring new deals on Monday, Cenovus Energy priced $800 million of notes in two parts, according to a market source.

Both tranches priced at the tight end of talk.

The deal included $450 million of 3.8% 10-year notes priced at Treasuries plus 152 basis points.

Cenovus sold the notes at 99.112 to yield 3.907%.

There was also a $350 million issue of 5.2% 30-year bonds sold with a spread of Treasuries plus 130 bps, or 99.602 to yield 5.226%.

BofA Merrill Lynch, Barclays and J.P. Morgan Securities LLC are the joint bookrunners.

Proceeds will be used to partially fund the redemption of the company's 4.5% senior notes due 2014. Pending that use of the net proceeds, the company will invest the net proceeds in bank deposits and short-term marketable securities.

Cenovus Energy is a Calgary, Alta.-based oil company.

Virginia Electric new deal

In other primary action, Virginia Electric & Power priced $585 million of 4.65% 30-year series D senior notes due Aug. 15, 2043 at Treasuries plus 95 basis points, according to a filing with the SEC.

The notes priced at 99.952 to yield 4.653%.

Barclays, BNP Paribas Securities Corp., RBS Securities Inc. and Wells Fargo Securities LLC were the joint bookrunners.

The company plans to use proceeds for general corporate purposes, including the repayment of short-term debt.

The electric utility is based in Richmond, Va.

ComEd sells mortgage bonds

Commonwealth Edison came to Monday's market selling $350 million of 4.6% 30-year first mortgage bonds, series 114, at a spread of Treasuries plus 92 bps, according to a FWP with the SEC.

The notes priced at 99.774 to yield 4.614%.

Mitsubishi UFJ Securities (USA), Inc., Morgan Stanley & Co. LLC, UBS Securities LLC, Credit Agricole Securities (USA) Inc. and U.S. Bancorp Investments Inc. were the joint bookrunners.

The company intends to use the proceeds to repay a portion of its outstanding commercial paper obligations and for general corporate purposes.

ComEd is an electricity provider based in Chicago. It is a subsidiary of Exelon Corp.

Sierra Pacific's $250 million

Sierra Pacific Power, a subsidiary of NV Energy Inc., priced on Monday $250 million of 3.375% 10-year general and refunding mortgage notes with a spread of Treasuries plus 80 bps, according to an informed source and an SEC filing.

The notes priced at the tight end of the Treasuries plus 80 bps to 85 bps talk.

Sierra Pacific priced the notes at 99.79 to yield 3.4%.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

The company plans to use the proceeds from the offering, together with available cash, to pay its $250 million of 5.45% general and refunding mortgage notes, series Q, which mature on Sept. 1, 2013.

NV Energy is a Las Vegas-based electric utility company.

Westar sells mortgage bonds

Also during the session, Westar Energy priced $250 million of 4.625% first mortgage bonds due 2043 with a spread of 93 basis points over Treasuries, or 99.998 to yield 4.625%, according to a syndicate source and an FWP with the Securities and Exchange Commission.

The notes priced at the tight end of talk, which was set in the Treasuries plus 95 bps area.

Mitsubishi UFJ Securities, UBS Investment Bank and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to provide long-term funds to finance the company's ongoing capital program, as well as repaying short-term debt under its commercial paper program.

The electric utility is based in Topeka, Kan.

Georgia Power floaters

There was also a new issue from Georgia Power Co., as the company came to market pricing $200 million series 2013C three-year floating-rate senior notes at par to yield Libor plus 40 bps, according to a filing with the SEC.

Barclays and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

Proceeds from the offering will be used to repay $100 million of the company's outstanding series Q 4.9% senior notes due Sept. 15, 2013 and a portion of its $500 million of outstanding 1.3% series 2010D senior notes due Sept. 15, 2013.

The electric utility is based in Atlanta.

Integrys sells preferreds

In the preferred stock market, Integrys Energy priced $400 million 6% $25-par junior subordinated notes due Aug. 1, 2073, according to a market source on Monday.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Interest will be payable at the fixed rate until Aug. 1, 2023, at which point the issue will begin to float at Libor plus 322 basis points.

Once floating, the rate will be reset on a quarterly basis.

Interest will be paid on a quarterly basis. The company can defer payments on one or more occasions for up to 40 consecutive periods. However, the deferred interest will compound quarterly.

The notes become redeemable on of after Aug. 1, 2023 at par plus accrued interest. Additionally, the company has the option to call the issue in whole, but not in part, in the event of a tax or regulation change at par plus accrued interest, or if there is a rating agency event at 102% of par plus accrued interest.

The notes will be listed on the New York Stock Exchange.

Proceeds will be used to reduce short-term debt and for general corporate purposes.

Integrys is a Chicago-based diversified energy holding company.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS costs closed unchanged to higher on Monday, a market source said.

Bank of America Corp.'s CDS costs were flat at 107 bps bid, 111 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 100 bps bid, 104 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 80 bps bid, 84 bps offered. Wells Fargo & Co.'s CDS costs closed unchanged at 63 bps bid, 67 bps offered.

Merrill Lynch's CDS costs held unchanged from Friday at 104 bps bid, 110 bps offered. Morgan Stanley's CDS costs went out flat at 136 bps bid, 140 bps offered. Goldman Sachs Group, Inc.'s CDS costs rose 1 bp to 127 bps bid, 131 bps offered.

Paul Deckleman and Stephanie Rotondo contributed to this review

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