JPMorgan, Merrill, KeyCorp, Colgate, Coca-Cola Enterprises, Hartford, Quebec price in steady conditions

By Andrea Heisinger and Paul Deckelman

Omaha, May 7 - A mix of corporate and financial names priced investment-grade issues Wednesday including JPMorgan Chase Capital XXVI, Merrill Lynch & Co. Inc., KeyCorp, Colgate-Palmolive Co., Coca-Cola Enterprises Inc., Nordic Investment Bank, Hartford Financial Services Group, Inc. and Quebec.

The tone was little unchanged from Tuesday, which was a good thing for issuers looking to tap the market in the wake of successful issues like the $9 billion in notes from GlaxoSmithKline Capital Inc.

In the investment-grade secondary market Wednesday, advancing issues led decliners by about a seven-to-six ratio, while overall market activity, reflected in dollar volumes, rose by about 17% from Tuesday's pace.

Spreads in general widened, as Treasury yields declined, with the yield on the benchmark 10-year note, for instance, falling by 8 basis points to 3.84%.

As the new-deal parade continued, the major focus of secondary market trading was the new issues, such as Merrill Lynch & Co., GlaxoSmithKline plc and Berkshire Hathaway.

Merrill brings two

Merrill Lynch priced two issues Wednesday.

The brokerage firm priced $1.75 billion of 7.75% 30-year subordinated notes at Treasuries plus 315 basis points.

This carried about a 25 bps new issue premium based on outstanding notes, a market source said.

Merrill Lynch, Pierce, Fenner & Smith Inc. was bookrunner.

It also priced $1.2 billion of two-year floating-rate notes at a coupon of three-month Libor plus 225 bps, a market source said, with Merrill Lynch as bookrunner.

Coca-Cola Enterprises upsizes

Coca-Cola Enterprises priced an upsized $275 million of three-year floaters at par to yield Libor plus 60 bps.

The size was increased from $250 million.

Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. ran the books.

Nordic, Key price

Nordic Investment Bank priced $1 billion of 3.625% five-year global notes at 99.569.

HSBC Securities Inc., J.P. Morgan and Nomura International plc were bookrunners.

KeyCorp priced an upsized $750 million of 6.5% five-year senior medium-term notes at 99.588 to yield 6.598% with a spread of Treasuries plus 350 bps.

They priced on the tight end of talk which was 350 to 362.5 bps, a source close to the deal said.

The size was increased from $300 million.

Citigroup Global Markets Inc., Credit Suisse Securities LLC, KeyBanc Securities and UBS Investment Bank were agents.

Colgate has rarity value

Colgate-Palmolive priced $250 million of 4.2% five-year medium-term notes at 99.977 with a spread of Treasuries plus 107 bps.

The issue went well, a source close to the issue said.

"They were very interested on the buy side," he said. "It was a tight print. The investors were happy to get a hold on the hard-to-find paper."

Agents were Goldman Sachs & Co., Citigroup and Morgan Stanley & Co. Inc.

Hartford oversubscribed

Hartford priced $500 million of 6% senior notes due 2019 at 99.878 to yield 6.013% with a spread of Treasuries plus 210 bps.

This was at the tight end of talk of 210 to 215 bps, a source said.

Deutsche Bank, Goldman Sachs and Merrill Lynch were bookrunners.

The issue was a couple of times oversubscribed, with a lot of the same "real money names" coming to the table, a source close to the deal said.

"We are starting to see hedge funds coming back to the table," he added.

Quebec priced $1 billion of 4.625% 10-year global notes at 99.399 to yield 4.701% with a spread of Treasuries plus 76.94 bps.

Deutsche Bank, HSBC, Merrill Lynch and RBC Capital Markets were bookrunners.

JPMorgan upsized

JPMorgan priced an upsized $1.6 billion of 70-year hybrid capital securities at par of $25.

The size was increased from $300 million.

The securities have a fixed coupon of 8% for five years and then a floating rate of three-month Libor plus 412 bps. They are non-callable for five years.

They priced at the tight end of talk of 8 to 8.125%, a source said.

J.P. Morgan was bookrunner.

Toyota Motor Credit Corp. priced $165 million of one-year floating-rate medium-term notes Wednesday.

They priced at par to yield one-month Libor plus 0 bps.

Barclays Capital Inc. was agent.

Terms were also released for an issue from Citigroup Inc. that priced late Tuesday.

They priced $550 million 10-year floating-rate senior notes at par to yield three-month Libor plus 170 bps.

Citigroup was bookrunner.

Public Service coming

A split-rated deal was announced from Public Service Co. of New Mexico as part of a $700 million issue that includes a junk-rated tranche from operating company, PNM Resources.

Public Service Co. is planning a $350 million issue of 10-year senior unsecured notes.

Lehman Brothers Inc. and Merrill Lynch are active bookrunners.

Korea Railroad announced price talk for its planned $300 million issue of five-year senior unsecured notes.

Price talk is from 160 to 170 bps for the Rule 144A/Regulation S issue.

Citigroup, HSBC and Morgan Stanley are bookrunners.

More deals seen Thursday

The market conditions remained favorable for issuers, with a source saying "spreads are really coming in."

This should mean a healthy amount of issuers Thursday.

"I think we'll have a couple of things tomorrow, but nothing too major," a source said.

Another source predicted "a ton" of issuance tomorrow.

"A lot of people are still sitting on a few deals, but nothing major," he said.

Merrill wider, others tighter in trading

A trader saw the new Merrill Lynch 7.75% notes due 2037, which had priced earlier in the session at a spread of 315 bps over comparable Treasuries, as having widened out to 325 bps bid, 320 bps offered.

However, that seemed to be the exception to the general rule, which saw spreads tighten.

The trader saw the new GlaxoSmithKline bonds, for instance - all of the fixed-coupon tranches had priced at the same 173 bps over Treasuries level on Tuesday - as having traded Wednesday morning several basis points tighter than that. By the afternoon, he said, the bonds had come in to about 168 bps bid, 165 bps offered, "5 to 8 [bps] tighter."

He saw Berkshire Hathaway's new bonds trading "10 to 15 [bps] tighter," at 140 bps bid, 135 bps offered. The 4.60% notes due 2013 had priced at 150 bps over and the 5.40% notes due 2018 at 155 bps over on Tuesday.

Traders did not immediately see any aftermarket dealings in such issues as the Colgate-Palmolive 4.20% notes due 2013 or the Hartford Financial Services Group 6% notes due 2019.

Among established issues, Citigroup's 5.30% notes due 2012 were seen having tightened about 25 bps on the day to the 180 level, while Goldman Sachs' 5.625% notes due 2017 were quoted 15 bps tighter, around the 201 bps level.

Bank, broker CDS wider

In the credit-default swaps market, a trader said that debt-protection costs for major banks were about 2 bps to 3 bps wider on the day, and big brokerage CDS costs were about 4 bps to 5 bps wider.

The cost of protecting investors in Countrywide Financial Corp. - still nominally an investment-grade credit - against a default widened by 20 bps, he said, to 320 bps bid, 340 bps offered.

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