Viterra plans split-rated deal; opportunistic issuers dry up; Alcoa, AT&T bonds trade stronger

By Andrea Heisinger and Cristal Cody

New York, July 29 - Investment-grade issuers mostly stayed away from the market on Thursday following a weaker tone the day before.

There have been several deals priced already this week, and one source guessed that most syndicate desks were just low on supply.

"I would think there just wasn't anybody ready to go," he said.

A split-rated sale of $300 million in 10-year notes from Canada's Viterra Inc. was announced. They are being sold under Rule 144A off the high-grade syndicate desk.

High-grade debt in the industrials sector was mixed in secondary trading, with bonds from Alcoa Inc. quoted as stronger, a trader said.

Also in the secondary, debt from AT&T Inc. firmed, a source said.

Overall investment-grade Trace volume climbed 9% to nearly $12.5 billion on Thursday, a source said.

The CDX Series 14 North American investment-grade index tightened 1 basis point to a mid bid-asked spread level of 104 bps, a source said.

Treasuries were mixed on the fall in unemployment claims and the final government auction of the week with the sale of seven-year notes.

The Treasury Department on Thursday sold $29 billion in seven-year notes at a yield of 2.394%.

The yield on the benchmark 10-year Treasury note ended the day unchanged at 2.99%.

The yield on the 30-year bond rose 2 bps to 4.08%.

Viterra plans split-rated deal

Agribusiness company Viterra is planning a $300 million issue of split-rated 10-year senior notes, an informed source said late in the day.

The notes (Ba1/BBB-) are expected to price on Friday as a private placement under Rule 144A.

J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. are running the books.

Proceeds are being used to reduce borrowings under a global credit facility and for general corporate purposes.

The company is based in Calgary.

Primary volume drops

There was a lack of excitement in the investment-grade primary during the day, with no new straight investment-grade bonds priced.

A syndicate source noted that the only deal came from the Republic of Chile and "wasn't that exciting anyway."

The deal from Viterra was announced, but it is not expected to price until Friday.

"The week's just winding down," the source said. "We've had a lot of deals, so I guess we can't really complain."

Low coupons and rates have been drawing companies to the market, but only if they need to issue bonds.

"There are only a limited number of opportunistic [issuers]," the source said.

Other than the Viterra sale, there isn't much issuance expected for Friday, the last day of July.

UBS gives deal terms

UBS AG, Stamford branch gave the terms for its $2.5 billion of 4.875% 10-year senior bank notes (Aa3/A+/A+) that priced late on Wednesday to yield a spread of 192 bps over Treasuries, a source away from the sale said.

The July 29 edition of the Prospect News Investment Grade Daily incorrectly identified the maturity as 2015.

UBS Investment Bank was the bookrunner.

The financial services company is based in Basel and Zurich, Switzerland.

Alcoa tighter

The industrial sector was active in the secondary market on Thursday but mixed, according to sources.

"Some wider, some tighter," a trader said.

Alcoa's bonds were tighter in trading. The 6.15% notes due 2020 firmed 10 bps to 289 bps over Treasuries, a source said.

The aluminum production and management company is based in Pittsburgh.

AT&T firms

AT&T's high-grade debt firmed in secondary trading.

The company's 6.55% bonds due 2039 were seen Wednesday trading at 152 bps and tightened to 149 bps early Thursday, according to a source.

The bonds were last quoted moving back out to 152 bps late in the day, the source said.

The telecommunications company is based in Dallas.

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