Volatile week ends drought of new deals; but window of opportunity lasts just one day

By Andrea Heisinger

Omaha, Aug. 10 - A window of opportunity for new investment-grade deals led to the bulk of issues happening on Wednesday while market conditions became less volatile, and then a three day period of stability collapsed.

Wednesday's new issues set a record day of volume so far this year, with $15 billion in deals. Trading was at a standstill by Thursday because of effects from other areas of the market.

There was some action Friday despite less than ideal market conditions.

Bank of America Corp. quietly issued $2.25 billion in three-year floating rate senior notes, according to a market source.

Marshall & Ilsley Corp. set new terms in a remarketing of $398.575 million in existing bonds. The two year 5.626% senior notes priced at a spread of 110 ½ basis points over Treasury.

"The tone is still pretty bad," said one market source. "There's still weakness after the Fed's injecting money into the system."

Whether things perk up in the coming week is still up in the air, said a market source.

"It depends on what happens with sub-prime mortgage and short-end liquidity," the source said.

The glut of new deals mid-week included a $3.5 billion five-tranche issue from Kraft Foods Inc. and a $2.6 billion issue of 18-month floating rate notes from IBM International Group Capital LLC.

Other smaller issues came from EnCana Corp. with $500 million in 30-year notes and The Kroger Co. with $300 million in 10-year senior notes.

A trio of utilities also put out new issues. Public Service Co. of Colorado issued $350 million in 30-year first mortgage bonds, Wisconsin Power & Light Co. had $300 million in 30-year debentures and PPL Electric Utilities Corp. brought $250 million in 30-year senior secured bonds.

Also issuing were Merrill Lynch & Co. with $2.75 billion in five-year notes and Citigroup Capital XIX with $1.1 billion of 60-year enhanced trust preferred securities.

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