Woolworths, RCI Banque, Public Storage sell deals as volume drops; Deutsche Telekom notes firm

By Andrea Heisinger and Cristal Cody

New York, April 5 - Woolworths Ltd. and RCI Banque SA each priced bonds on Tuesday in a primary dominated by Yankee issues.

Australia-based grocery store operator Woolworths sold $850 million of notes in two parts. The sale was split between notes due 2016 and 2021 and was sold under Rule 144A.

The financial arm of French automaker Renault SA, RCI Banque, priced an upsized $1.25 billion in three tranches.

Real estate investment trust Public Storage sold $325 million of 6.5% perpetual preferred stock after the sale went overnight from Monday. The shares sold at the tight end of price guidance.

On the sovereign side, European Investment Bank sold $4 billion of three-year global notes in line with talk in the mid-swaps area.

Sources said the day went as predicted with domestic corporate bond sales giving way to those from overseas.

"This is going to be the story for a while," one source said. "I mean, there's nothing wrong [with the market]. We had that rush the last couple of weeks."

Demand for new high-grade paper has not let up, as Monday's mostly oversubscribed sales showed.

The source also said that even if there are deals primed to go out there, headlines from tensions in the Middle East to other sources could derail those plans.

"There was that [two-week] lull where that happened, so I wouldn't be surprised," she said.

Trading was stronger on Tuesday. Overall investment-grade Trace volume jumped 30% to more than $15 billion, a market source said.

The new notes from Woolworths firmed, while Deutsche Telekom International Finance BV's 3.125% notes due 2016 sold on Monday were slightly better bid in the secondary market, traders said.

Treasuries sold off on Monday, and bonds were pressured on the short end of the curve. The 10-year note yield climbed 6 basis points to 3.48%. The 30-year bond yield rose 2 bps to 4.5%.

Tuesday's release of the minutes of the Federal Reserve's most recent policy meeting on March 15 held no surprises, analysts said.

"What has got us down is this idea inflation is picking up," Nick Kalivas, a market strategist at MF Global. "The market seems a bit worried the Fed may be too relaxed about it. That's why we're seeing a little bit lower prices today."

RCI upsizes trade

RCI Banque priced an upsized $1.25 billion of notes (Baa2/BBB) in three parts late in the day under Rule 144A, said a source who worked on the deal.

A $450 million tranche of three-year floating-rate notes was added to the sale, a source said, adding that it was a strong possibility when the deal was announced. Those notes priced at par to yield Libor plus 187 bps. This was tighter than talk in the Libor plus 195 bps area.

The $300 million of 3.4% three-year notes priced at a spread of Treasuries plus 215 bps. Price guidance was in the 220 bps area, and the notes priced at the tight end of that.

An upsized $500 million tranche of 4.6% five-year notes priced at 235 bps over Treasuries. They were sold at the low end of guidance in the 240 bps area. This tranche was increased from $400 million.

Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes.

The issuer is based in Noisy-le-Grand, France.

Woolworths does two tranches

Food retailer Woolworths sold $850 million of notes (A3/A-) in two tranches, said an informed source.

The $300 million of 3.15% five-year notes priced at a spread of Treasuries plus 90 bps.

A tranche of $550 million of 4.55% 10-year notes sold at 110 bps over Treasuries.

The bookrunners were Citigroup, JPMorgan and Merrill Lynch.

The notes were sold under Rule 144A.

Proceeds are being used for general corporate purposes.

Woolworths' notes were seen firming in secondary trading, sources said.

The notes due 2016 were quoted late afternoon at 88 bps bid, and the tranche of notes due 2021 traded at 109 bps bid, one trader said.

A second trader saw the notes due 2016 at 88 bps bid, 82 bps offered and the notes due 2021 firmer at 108 bps bid, 97 bps offered.

Going into the close, another trader saw the five-year notes at 87 bps bid, 85 bps offered and the 10-year notes at 104 bps bid, 102 bps offered.

The issuer is based in Bella Vista, Australia.

Public Storage prices

Public Storage sold $325 million, or 13 million shares, of 6.5% perpetual cumulative preferred stock, series Q, (Baa1/BBB+/A-) at par of $25, according to a market source and an FWP filing with the Securities and Exchange Commission.

The preferreds were talked in the range of 6.5% to 6.625%, a market source said when the deal was announced on Monday.

There is a $48.75 million over-allotment option.

The bookrunners were Citigroup, Merrill Lynch and Wells Fargo Securities LLC.

Proceeds are being used to redeem depository shares representing interests in 7.25% cumulative preferred shares, series I, at $25 per share plus accrued dividends.

The real estate investment trust of storage facilities is based in Glendale, Calif.

EIB's $4 billion

EIB priced $4 billion of 1.5% three-year global notes (Aaa/AAA) early in the day to yield mid-swaps flat, or Treasuries plus 34.3 bps, an informed source said.

Price talk was at mid-swaps flat early in the day.

The bookrunners were Credit Suisse Securities, JPMorgan and Merrill Lynch.

The funding arm of the European Union is based in Kirchberg, Luxembourg.

Deutsche Telekom firmer

Deutsche Telekom International Finance sold $1.25 billion of 3.125% five-year notes (Baa1/BBB+/BBB+) on Monday at a spread of 95 bps over Treasuries, an informed source said.

The notes were seen at 93 bps bid, 92 bps offered, the trader said. Another trader saw no activity in the notes.

The funding unit of telecommunications company Deutsche Telekom AG is based in Bonn, Germany.

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