Hess, Paccar, New York Life price in dull high-grade market; Citi tighter on payback report

By Andrea Heisinger and Paul Deckelman

New York, Dec. 9 - Wednesday was another day full of small deals that were priced early, with Hess Corp., Public Service Co. of New Hampshire and Paccar Financial Corp. all selling bonds by early afternoon.

An offering from New York Life Global Funding was the last of the day to price.

Hess had the largest sale, with $750 million in 30-year notes.

Smaller sales came from Paccar Financial, which sold $250 million in three-year notes, and Public Service of New Hampshire, which priced $150 million in 10-year first mortgage bonds.

New York Life's subsidiary upsized its sale from $250 million to $350 million of floating-rate notes due in 2011.

The day was classified as a dull one, as all of the deals priced early - and there isn't much in the pipeline for the rest of the week to work on, sources said.

Among established issues in the secondary arena on Wednesday, a market source said the CDX Series13 North American high-grade index had risen by 1 basis point to a mid bid-asked spread level of 98 bps.

Advancing issues fell behind decliners, by a roughly ten-to-nine ratio.

Spreads in general were seen tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year notes rose by 5 bps Wednesday, to 3.43%.

Overall market activity, reflected in dollar-volume totals, jumped 20% from Tuesday's pace.

"Volume's pretty good," a trader said, noting that the Trace system was showing some $9.8 billion of bonds turning over, "a pretty decent amount of volume, for where we've been."

For yet another session, BlackRock Inc.'s new multi-tranche bond issue was actively traded, with its five-year issue the busiest of the group, but its three-year paper continuing to show the biggest gains.

Time Warner Cable Inc.'s two-part deal from Tuesday was also seen trading busily.

A report that Citigroup Inc. plans to pay back the billions of dollars it borrowed from the federal government under the TARP program sent the New York -based banking giant's bonds trading at tighter levels.

Paccar prices short bond

Paccar Financial Corp. priced $250 million of 1.95% three-year senior unsecured notes at Treasuries plus 82 bps.

They were sold at the tight end of price talk that was initially whispered in the 90 bps area, the source said. It was revised to the 85 bps area, with a margin of plus or minus 3 bps. Books were more than two times oversubscribed.

Citigroup Global Markets, HSBC Securities and RBS Securities ran the books.

The issuer is a subsidiary of truck maker Paccar Inc. and provides financing and leases. The company is based in Bellevue, Wash.

Hess prices 30-year notes

New York City-based energy company Hess sold $750 million of 6% 30-year senior unsecured notes by early afternoon at Treasuries plus 165 bps.

Bookrunners were Goldman Sachs & Co., J.P. Morgan Securities and Morgan Stanley & Co.

Proceeds will be used to purchase its 6.65% notes due in 2011 that were tendered for a purchase offer. They will also be used for working capital and general corporate purposes.

Public Service of N.H. sells mortgage bonds

Public Service Co. of New Hampshire priced $150 million of 4.5% 10-year first mortgage bonds early in the day at 115 bps over Treasuries.

Bank of America Merrill Lynch and Bank of New York Mellon Capital Markets were bookrunners for the issuer based in Manchester, N.H.

Proceeds will be used by the electric subsidiary of Northeast Utilities to refinance short-term debt and for working capital purposes.

Market 'unremarkable' for day

The primary market saw its trades get done early in the day - as it had the previous day. All of the sales were "pretty unremarkable," a market source said.

"I don't think there was much excitement today," he said, adding that companies are more focused on holiday parties.

Another source said late in the day that things were "downright boring if you ask me."

Perhaps the biggest news of the day was that Citigroup is expected to pay back its $45 billion in TARP money to the federal government through an equity offering.

That would make it the last of the major banks to do so, with Bank of America Corp. announcing it would repay its TARP funds last week.

The Citi news had little to no impact on the high-grade primary, a syndicate source said. It was likely only noticeable in the secondary, he said.

"It was announced too late for anyone to really care," he said. "It will maybe hit tomorrow at the [market] open."

"I don't think it's going to affect anyone's go, no-go calls."

N.Y. Life upsizes floaters

New York Life Global Funding priced an upsized $350 million of floating-rate notes due in 2011 by mid-afternoon at par to yield three-month Libor plus 12.5 bps. The size was increased from $250 million, a source said.

The notes were sold via Rule 144A.

Bank of America Merrill Lynch and Goldman Sachs & Co. ran the books.

The funding arm of insurance company New York Life is based in New York City.

BlackRock dominates secondary trading

A trader said that as was the case on Tuesday, trading was heavy Wednesday in BlackRock's three-part bond issue, which had priced on Monday, but unlike the case on Tuesday, "BlackRock is now Trace-eligible," so the extent of those dealing can be easily seen.

The company's 3.50% notes due 2014 was the most active issue, with over $92 million of the bonds having changed hands by late afternoon. Those bonds were seen offered at some 127.5 bps over comparable Treasuries, versus 132 bps bid, 128 bps offered seen on Tuesday, and 135 bps at the $1 billion issue's pricing on Monday.

Its $1 billion of 5% notes due 2019, which had priced Monday at 160 bps over and which then traded on Tuesday at 159 bps bid, 158 bps offered, stayed in that same region on Wednesday, offered at 157 bps, on volume of $77 million, putting it well up there on the Most Actives list.

The $2.25 billion three-year issue meantime saw about $60 million, and stayed at the 93 level it had occupied on Tuesday - still in solidly from the 110 bps over level at which the $500 million offering - the smallest of the $2.5 billion deal's three tranches - had priced. "There was a lot of activity, although it wasn't among the Most Actives."

"Spreadwise, it doesn't look like much changed from [Tuesday]" on any of the three issues, the trader said.

Time Warner trades around

The other really active name on the session was Time Warner Cable, following the pricing of the New York-based cable operator's $2 billion two-part deal on Tuesday.

A trader saw its 3.50% notes due 2015 at 148 bps bid, 147 bps offered, in by several bps from the 153 bps level where the $500 million issue priced Tuesday.

Time Warner Cable's 5% notes due 2020, which priced Tuesday at 188 bps over, were seen trading at 184 bps bid, 181 offered.

Another trader saw the 5% notes as the second-most active issue on the day, with $91 million having changed hands. The bonds tightened to around 180 bps bid very early in the day, then they "widened out later in the day, but not that much wider," staying around 182-183-184 bps over, "so there wasn't a big range of spreads."

Established Time Warner Cable paper also busy

The trader saw some of the company's older issues as among the Most Actives, along with the new 5% notes. Among these were "the high-coupon issues" the company might be thinking of taking out, such as the 8¼% notes due in April 2019 and its 8¾% notes due in February 2019.

Some $91 million of the 8¼% notes due 2019 saw some $91 million of the bonds change hands, last seen trading at 210 bps bid, 204 bps offered, versus a Tuesday offering level of 195 bps, "so it doesn't look like there was much change from [Tuesday] to today, but there was definitely a lot of activity in it."

The 8¾% notes, meantime, had about one-third of the volume of the 81/4s, at about $37 million. "Most of that was early in the day," the trader said, with the bonds staying around 240 bps. "There was a lot of activity, but no major changes."

Citi rises on TARP news

Citigroup was seen as a major factor, on news reports indicating that the company is making preparations to raise money so it can repay the $45 billion it got from the government under the Troubled Asset Relief Program.

Its 6.01% notes due 2015 were "the most active bond that was not BlackRock and was not Time Warner," a trader said. "Its spread came in quite a bit," from the high 320s on Tuesday to 285 bps bid, 290 bps offered on Wednesday.

At one point, the trader said, there was a 300 bps bid for the bonds late in the day, but the bonds later finished at that 285/290 region.

A second trader said that the Citi news "moved everything [in the financials sector] about 15-20 bps tighter, generically. That's been most of our focus."

Another trader opined that the market "really likes that [Citi] news,"

Bank CDS levels tighten

Also among the financials, a trader who watches the credit-default swaps market said that the cost of insuring holders of major-bank paper against a possible event of default tightened between 1 bp and 8 bps with Citigroup's CDS costs having come down by 8 bps to 185 bps bid, 195 bps offered on the news that it is preparing to repay its TARP borrowing.

CDS costs for big brokerage paper meantime were anywhere from 5 bps tighter to 2 bps wider.

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