Caterpillar Financial, CME Group, Societe Generale price; Northern Trust, Caterpillar tighten

By Andrea Heisinger

New York, Aug. 7 - High-quality names continue to get new issues done, proven Thursday by Caterpillar Financial Services Corp., CME Group Inc., Societe Generale and Eksportfinans ASA.

It was a less-than-stellar market open, a source said, but issuers that are more highly rated aren't as easily scared off.

The secondary was also active, but with traders reporting no companies' bonds tightening or widening dramatically, even on earnings announcements.

"It was just another average day," one secondary source said.

However the Caterpillar bonds performed well when freed to trade and Wednesday's deal from Northern Trust Corp. was also a strong performer.

High ratings still dominate primary

The investment-grade market opened on a sour note Thursday, partly due to American International Group's announcement of a $5.36 billion loss late Wednesday.

The red ink didn't have much of an effect on the market, a source said, but may have scared off any issuers that weren't highly rated.

CME Group was one of the larger issuers of the day, and a surprising one to some.

The company priced $1.3 billion in three tranches.

The $250 million of one-year floating-rate notes priced at par to yield three-month Libor plus 20 bps, while the $300 million of two-year floaters priced at par to yield three-month Libor plus 65 bps.

The company also priced a $750 million tranche of 5.4% five-year notes at 99.989 to yield 5.403% with a spread of Treasuries plus 225 basis points.

It was the company's debut debt deal, a source said, which was why some were surprised to see it come into the market.

The company is using the proceeds to help finance its merger with the New York Mercantile Exchange, which may have spurred it to issue despite market conditions, a source said.

Another said he was surprised to see CME issue simply because of the AIG earnings announcement.

"I think that [AIG] scared off anyone looking at the market that wasn't solid-rated," he said. "Today was definitely not a rip-roaring day to get something done, so it was surprising to see so many issuers."

In regard to the CME issue, a source said there's no certainty the market will get better, which was likely why the company issued Thursday despite conditions.

Caterpillar matches talk

Another financial issue came from Caterpillar Financial, pricing $850 million in two tranches.

The $550 million of two-year floaters priced at par to yield three-month Libor plus 50 bps. The company also priced $300 million of 4.9% five-year notes at 99.877 to yield 4.928% with a spread of Treasuries plus 175 bps.

Both tranches priced in line with talk, which was Libor plus 50 bps area for the floating-rate notes and 175 bps area for the fixed-rate notes.

Citigroup Global Markets Inc. and Goldman Sachs & Co. ran the books.

The issue went well, a source close to the deal said, noting that it's a higher-quality name.

European issuers sell floaters

European financial services company Societe Generale priced $2 billion in extendible floating-rate notes at par to yield three-month Libor plus 41 bps, initially.

The notes have an initial maturity of 2009 and final in 2013.

Morgan Stanley & Co., Inc. and Societe Generale ran the books.

Another financial issue came from Eksportfinans, pricing $100 million of one-year floaters at par to yield three-month Libor plus 13 bps.

Barclays Capital Inc. was agent for the issue.

Public Service several times oversubscribed

Wednesday's issue from Xcel Energy subsidiary Public Service Co. of Colorado was "very successful," said managing director of investor relations and treasurer Paul Johnson.

The $600 million issue of 10- and 30-year first mortgage bonds was three to four times oversubscribed, Johnson said.

"This was planned financing since we have maturities coming due in the next month," he said. "We knew we were going to issue in August."

There was no particular strategy for issuing Wednesday - it was simply debt the company needed to get done.

Public Service Co. last issued notes in 2007, in the amount of $350 million.

It decided to go with the 10- and 30-year bonds to spread out the maturities, Johnson said. This allows the company to manage the maturities so the company's outstanding notes don't all come due at the same time.

Northern Trust happy with issue

Financial holding company Northern Trust Corp. priced $700 million of bonds in two tranches Wednesday, in an issue that was oversubscribed.

John O'Connell, a spokesperson for Northern Trust, said Thursday that the company regularly uses the five- and 10-year maturities for financing.

"We were very pleased with the execution and results of the transaction," he said.

The company last issued in November, 2007, pricing $200 million of five-year notes.

End of week seen quiet

After a surprising amount of new issues Thursday, Friday should be quiet, a source said.

"We really weren't even expecting what we had Thursday, so we probably won't see much Friday," he said.

It's possible some more high-quality financial names could come into the market, but it is more likely to be a quiet summer Friday, he added.

AIG seen moving little after earnings loss

Bonds of insurance and financial giant American International Group bonds were not seen moving dramatically in the secondary Thursday after the company reported a $5.36 billion loss for the second quarter late on Wednesday.

A secondary source said he wasn't seeing much with AIG, and if there was any great widening of the company's bonds, he missed it.

There were no standout movers of the day in general, he said.

After reporting the large deficit, AIG said it was due to write downs and mortgage-related losses.

Caterpillar, Northern Trust notes tighter

A secondary source said the new Caterpillar Financial 4.9% five-year notes were seen at 170 bps bid, 165 bps offered after pricing at 175 bps.

Also tighter was Wednesday's issue from Northern Trust.

The notes were seen trading better in the secondary Thursday afternoon, a trader said.

The 5.5% five-year notes were at 210 bps bid, 200 bps offered, sharply improved from 228 bps pricing, while the 6.5% 10-year notes were at 232 bps bid, 227 bps offered from pricing at 248 bps.

Bank CDS wider, brokerage unchanged

Bank credit-default swaps weakened about 10 bps Thursday after tightening Wednesday.

Wachovia Corp. debt-protection costs were seen widening about 10 bps, a trader said, to 240 bps bid, 250 bps offered.

Brokerage CDS costs were seen unchanged.

The number of investment-grade advancers triumphed over decliners Thursday. Those advancing totaled 1,502, with the decliners totaling 955.

This was a turnaround from Wednesday where advancers totaled 1,182, with those declining numbering 1,399.

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