Flood hits investment grade market with nearly $13 billion in new issues

By Andrea Heisinger

Omaha, Sept. 5 - There was no shortage of new investment-grade issues Wednesday with close to $13 billion pricing.

The big issue of the day was from AstraZeneca plc with $6.9 billion of notes in four tranches.

The first tranche was $650 million in two-year floaters that priced at par with a spread of Libor plus 30 basis points. The second tranche was $1.75 billion in five-year 5.4% notes that priced at Treasuries plus 130 bps with a price of 99.809 and yield of 5.444%.

The third tranche was $1.75 billion in 10-year 5.9% notes had a spread of Treasuries plus 145 bps with a price of 99.932 and yield of 5.909%. The final tranche of $2.75 billion in 6.45% 30-year notes had a spread of Treasuries plus 170 bps with a price of 99.578 and yield of 6.482%.

Nordic Investment Bank priced $1.5 billion in three-year 4.5% notes at Treasuries plus 56 bps with a price of 99.800 and yield of 4.572%.

Another new issue over the $1 billion mark was Rohm & Haas Co. with $1.1 billion in two tranches. The first tranche was $250 million in 5.6% notes due 2013 with a spread of Treasuries plus 145 bps and price of 99.985 with a yield of 5.603%.

The second tranche was $850 million in 10-year 6% notes with a spread of Treasuries plus 160 bps, price of 99.487 and yield of 6.069%.

EOG Resources, Inc. priced $600 million in 10-year 5.875% notes at a spread of Treasuries plus 140 bps with a price of 99.931 and yield of 5.884%.

SunTrust Banks Inc. had an upsized offering of $500 million in 10-year 6% senior notes priced at a spread of Treasuries plus 153 bps. It was originally $300 million. The notes have a price of 99.992 with a yield of 6.001%.

Another upsized deal came from Kentucky Power Co. with $325 million in 10-year 6% notes with a spread of Treasuries plus 160 bps, price of 99.487 and yield of 6.069%. The offering was originally $250 million.

HSBC Holdings plc priced $750 million in 30-year 6.5% global subordinated notes at a spread of Treasuries plus 175 bps. They have a price of 99.763 with a yield of 6.518%.

And KeyBank NA had $350 million in five-year 5.5% senior notes priced at a spread of 135 bps over 4.125% notes due 2012, with a price of 99.986 and yield of 5.503%.

Two other issues came from Citigroup Inc. with reopenings. One was $300 million in five-year 5.25% senior notes priced at Treasuries plus 115 bps with a price of 99.762 and yield of 5.310%. The other is $300 million in 10-year 6% senior notes priced at Treasuries plus 130 bps with a price of 101.653 and yield of 5.778%.

Business as usual

Despite the amount of new issues, market sources were saying it was back to business as usual after volatile conditions stifled companies coming to the market.

"It just keeps plugging along," one market source said. "To be honest there's nothing really that sexy out there."

"The issues are still all selling," another source said.

A backlog of new issues from August and beyond is starting to make its way to the market, a source said.

They counted AstraZeneca and Rohm & Haas as part of that, as well as some of the utilities that priced recently.

"I would say that ComEd and Kentucky Power have been on the calendar for a while," the source said.

Companies are getting resilient to the turbulent market conditions, a market source said.

"Two weeks ago not as many people would be testing the market," the source said.

Issues from Tuesday were doing all right in trading, a secondary source said.

New deals trade well

CSX Corp. issued $1 billion of notes in two tranches. The $400 million tranche of 5.5-year notes priced at Treasuries plus 155 bps and were trading the same. The $600 million tranche of 10.5-year notes priced at Treasuries plus 175 bps and were trading at 177 bps.

Another issue from Tuesday, Commonwealth Edison Co., with $425 million in first mortgage bonds, priced at a spread of Treasuries plus 163 bps and were trading at 161 bps.

Thursday will likely have the same volume as Wednesday, one source said.

"I think this continues tomorrow," they said. "We'll see five, six, seven more."

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