Viterra sells split-rated bonds; other issuers expected Monday; Noble Group debt firms

By Andrea Heisinger and Cristal Cody

New York, July 30 - Viterra, Inc. priced an issue of split-rated bonds on Friday to close out a strong week and month of deals in the high-grade bond market.

Noble Group Ltd. also tapped the market, with the Hong Kong-based shipping company pricing $750 million in two tranches.

Viterra, a Canadian agribusiness company, priced an upsized $400 million of 10-year senior notes off the high-grade syndicate desk.

There weren't any other deals for the day, and it was mostly due to lack of volume. There hadn't been any straight high-grade deals the previous day, either.

"I'm sure we'll see something Monday," a source said. "Everyone's waiting."

The secondary market was weaker on Friday on the last trading day of the month, according to sources.

The CDX Series 14 North American investment-grade index ended the day unchanged from Thursday's mid bid-asked spread level of 104 basis points, one market source said.

"Heard spreads were generally wider 3 to 5 bps," a trader said.

Overall investment-grade Trace volume fell 26% to about $9 billion, a source said.

The new paper from Viterra was not active in secondary trading on Friday, but Noble Group's new two-part deal was stronger, sources said.

Meanwhile, U.S. Treasuries had a better day on Friday as prices rose and pushed yields down.

"Treasuries are on fire. If you bought at the auctions, you're in profits," a trader said.

The government sold $29 billion in seven-year notes on Thursday, $37 billion in five-year notes on Wednesday and $38 billion in two-year notes on Tuesday.

The yield on the 10-year note fell 9 bps to 2.9% on Friday. The yield on the 30-year bond fell to 3.99% from 4.08%.

Viterra's split-rated deal

Viterra priced an upsized $400 million issue of split-rated 5.95% 10-year senior notes (Ba1/BBB-) to yield 310 bps over Treasuries, a market source away from the sale said.

The size was increased from $300 million announced the previous day. The notes were also sold at a spread that was tighter than guidance of 312.5 bps over Treasuries.

The issue was done in a private placement under Rule 144A and will be guaranteed by certain subsidiaries.

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

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

The global agribusiness company is based in Calgary, Alta.

Primary quiet to end July

The final two days of the month were quiet, with only a couple of deals priced. Two of those offerings were in the emerging markets sector.

Meanwhile, market sources anticipate some issuers could tap the market after releasing earnings.

"It's still earnings, so we could have some companies [that reported this week] selling," a syndicate source said late in the day. "If there's nothing negative at the open, I would think we'll have a couple jump in."

Demand is expected to stay strong for investment-grade bonds as long as the market remains stable, the source added.

"It's been good for a couple weeks, but I think everyone's just waiting for a drop."

Noble sells two tranches

Hong Kong's Noble Group priced a $750 million two-tranche bond issue due 2015 and 2020, an informed market source said.

The deal included $500 million 4 7/8% bonds due 2015 that priced at Treasuries plus 330 bps and $250 million 6 5/8% bonds due 2020 that priced at Treasuries plus 375 bps.

Both of Noble Group's new tranches firmed in the high-grade secondary market, a trader said. The five-year notes were seen trading at 327 bps bid, 321 bps offered, while the 10-year notes firmed to 374 bps bid, 367 bps offered.

JPMorgan was the bookrunner for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes.

Noble Group is a shipping company.

Viterra inactive in secondary

While Viterra sold 5.95% notes due 2020 at Treasuries plus 310 bps on Friday, the notes were not seen trading in the secondary market by the market close, sources said.

"Nada," according to one trader.

"Didn't see a thing," another trader said.

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