Ontario, RPM, Duke, Nabors price; volatility back on negative headlines; JPMorgan up WaMu down

By Andrea Heisinger and Paul Deckelman

Omaha, Feb. 14 - New issue volume was higher than expected Thursday, with Duke Realty Corp., the Province of Ontario, RPM International Inc. and Nabors Industries Inc. pricing.

"I was only expecting one of those," a market source said. "It's surprising considering the tone wasn't that great."

In the investment-grade secondary market Thursday, declining issues led advancers by about a 61/2-to-five ratio, while overall market activity, reflected in dollar volumes, rose about 3% from Wednesday's levels.

However, while spreads were seen better, participants reported a generally featureless market, with not much of note going on.

Upside issues included financials JP Morgan Chase and Capital One, as well as such non-financial names as Comcast Corp. and AT&T Corp.

Downsiders included Washington Mutual and Bear Stearns.

Duke Realty upsizes

Duke Realty upsized its issue from $150 million to $275 million of 8.375% cumulative preferred shares.

The perpetual shares priced at par of $25 and are non-callable for five years.

Books were run by Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Investment Bank and Wachovia Capital Securities LLC.

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

RPM tight to talk

Commercial paint and sealant company RPM International priced $250 million of 6.5% 10-year notes at 98.526 to yield 6.705% at a spread of Treasuries plus 285 basis points.

This was on the tight side of price talk of 287.5 bps, a source said.

Banc of America Securities LLC, Goldman Sachs & Co. and Wachovia Capital Securities LLC ran the books.

This issue also went well, as was told by the spread the notes came at, a source close to the deal said.

They priced 2.5 bps inside of guidance, and it went well if not very well, the source added.

The Province of Ontario priced $1.5 billion in non-callable bonds at Treasuries plus 96 bps.

Bookrunners were Barclays Capital Inc., J.P. Morgan Securities LLC and TD Canada.

Full terms were not available at press time Thursday.

Nabors Industries priced $575 million 10-year senior notes in a Rule 144A offering.

Citigroup and UBS Investment Bank ran the books.

Week expected to end quietly

The end of the week should end in its typical quiet fashion, sources said. The market will close early ahead of the President's Day holiday.

"It should be very quiet, especially how things ended today," a market source said.

It was a volatile session, with negative headlines swaying the market. This included negative news from the Fed.

"The indices ended unchanged to wider," a source said. "I think they were off about 5 bps by the end of the day."

Another source said things deteriorated throughout the day after a somewhat strong start.

"We did spend most of the day tighter, but it kind of slipped at the end of the day," he said.

"Tomorrow should be quiet, like we all thought today would be."

There are no upcoming issues on the calendar, but sources have said there is a backlog building. Most of this will not come out until the next month or two.

Short-covering seen ahead of holiday

A trader said that overall spreads were better. He said it was likely that the market was seeing some short-covering at the end of the holiday-shortened week (a 2 p.m. ET close has been recommended for Friday ahead of the Presidents Day holiday weekend that will shutter the financial markets completely on Monday).

"With the light new-issue calendar, it's kind of a technical bid, for people wanting to put cash to work over the weekend."

On a "pretty tiresome" and "uneventful" day, he said, "nothing jumps out at me" for particular market features.

CDS market quiet

Another trader said that in the credit-default swaps market, "it was quieter today than it was [Wednesday]." He saw debt-protection costs for major bank paper about unchanged to 3 basis points wider, while brokerage paper CDS were unchanged to 5 bps wider.

He said the monoline bond insurers "didn't do anything," with the cost of protecting MBIA Inc.'s AAA bonds from a possible event of default, and those of rival bond insurer Ambac Financial Group Inc., little changed at 450 bps bid, 475 bps offered.

Another trader saw New York-based bond insurer MBIA's 14% surplus bonds due 2033 at 89 bid, 92 offered, "same as where they had been."

Cash market mixed

Back among the straight cash bonds, JP Morgan's 5.15% notes due 2015 were seen having tightened by 20 bps to around the 135 bps level, although another market source saw its 4.5% notes due 2010 wider by 10 bps at around the 150 level.

Among other financial bonds, Capital One's 5.25% notes due 2017 were quoted having come in by around 15 bps to the 255 bps level. WaMu's 6.875% notes due 2011 were seen by a market source about 15 bps wider to 650 bps, while Bear Stearns' 7.25% notes due 2018 were a couple of basis points wider at the 390 bps range.

Among the non-financials, AT&T's 5.625% notes due 2016 came in by around 15 bps, to settle in at 155 bps. Cable giant Comcast's 6.95% bonds due 2037 tightened by around the same among to 235 bps.

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