CenturyLink gives deal terms, widens 50 bps in trading; summer ahead; Caterpillar bonds firm

By Andrea Heisinger and Cristal Cody

New York, June 10 - There were no new deals to close out a week that was heavy on energy and utility names and BBB rated and crossover deals.

There was $9.14 billion in 15 new trades in the high-grade market for the week, according to Prospect News data.

Terms were given for $2 billion of notes in three parts sold late Thursday by CenturyLink, Inc. The split-rated deal included a reopening of 30-year bonds.

Little excitement is expected in the coming week on the primary side of the market, sources said.

"I think the summer lull is setting in," one syndicate source said, referring to the typically quiet summer months for new deals.

A syndicate source at a large desk said that it should be "quiet" in the coming week with between $6 and $9 billion in new trades.

"There could be a little more than this week, but we're looking at maybe three trades," he said. "I heard away that others have a couple of things - about $1 billion each."

In the secondary, overall trading volume fell to less than $10 billion on Friday.

The new bonds from CenturyLink "widened 50 basis points," a trader said.

Industrial bonds such as debt from Caterpillar Inc. stayed strong on Friday, according to a one trader.

"Most things held in pretty firm in industrials. Caterpillar's a basis point better today," the trader said.

NextEra Energy Capital Holdings Inc.'s bonds held at weaker levels but continued to trade Friday "pretty much close to where its wides have been," a trader said.

Atmos Energy Corp.'s notes priced on Tuesday traded flat from the issue price.

Also in the secondary market, the Republic of Iceland's new five-year notes were active in early Friday trading, sources said.

Meanwhile Treasuries rallied on Friday, sending yields down 2 bps to 3 bps in trading. The 10-year note yield fell to 2.97% from 2.99%.

CenturyLink gives terms

Communications company CenturyLink gave terms for its $2 billion issue of split-rated senior notes (Baa3/BB/BBB-) in three parts that priced late on Thursday, according to a press release and FWP filings with the Securities and Exchange Commission.

A $350 million tranche of 5.15% six-year notes priced at a spread of Treasuries plus 360 bps.

The second tranche of new notes was $1.25 billion of 6.45% 10-year notes sold at 350 bps over Treasuries.

The company also reopened its 7.6% notes due 2039 to add $400 million. The notes were priced at a spread of Treasuries plus 380 bps.

Total issuance is $800 million including $400 million sold on Sept. 14, 2009 at 275 bps over Treasuries.

Active bookrunners were Barclays Capital Inc. and Bank of America Merrill Lynch.

Proceeds, along with cash on hand and borrowings under a credit facility, are going to fund payment of the $2.5 billion Savvis Inc. merger consideration, refinance Savvis' credit facility and pay merger fees and expenses.

The integrated communications company is based in Monroe, La.

Atmos unchanged

Atmos Energy's new deal stayed flat in trading on Friday, a source said. The company priced $400 million of 5.5% 30-year senior bonds (Baa1/BBB+/A-) at a spread of Treasuries plus 125 bps on Tuesday.

The notes traded Friday at 124 bps bid, 122 bps offered, the source said.

The natural gas distribution, transmission and storage company is based in Dallas.

Caterpillar stronger

Caterpillar's new 10-year notes and 30-year bonds stayed firm in trading since they priced on May 24, a trader said Friday.

The 3.9% notes due 2021, which sold at 85 bps over Treasuries, were seen going out at 82 bps bid, 80 bps offered. The 5.2% 30-year bonds priced at Treasuries plus 98 bps tightened to 91 bps bid, 89 bps offered.

The heavy machinery maker is based in Peoria, Ill.

NextEra stays weak

NextEra's 4.5% 10-year debentures (Baa1/A-), which priced on Tuesday to yield Treasuries plus 148 bps, stayed weaker at 158 bps bid, 154 bps offered on Friday, according to a trader.

The issuer provides electric service through its utility subsidiaries and is based in Juno Beach, Fla.

Iceland notes rise

The Republic of Iceland priced $1 billion of 4.875% notes due 2016 at 99.484 to yield 4.993% on Thursday.

A London-based trader said Friday that the notes (Baa3/BBB-/BB+) traded early in the day at 99.70 bid, par offered, later rising to 99.75 bid, par offered.

The notes were seen trading as low as 99.10 bid, 99.50 offered.

The issuer is based in Reykjavik.

-Christine Van Dusen contributed to this review

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