No new deals to end week; total issuance exceeds expectations; eBay, Wal-Mart paper snapped up

By Andrea Heisinger and Cristal Cody

New York, Oct. 22 - There were no new bonds priced in the high-grade market to end the week Friday, sources said. It was a quiet end to a week with several marquee issues.

There was more than $21 billion in new investment-grade bonds sold, mostly concentrated in large corporate deals and emerging market names. That was more than double the amount priced the previous week and, a source said, more than was expected.

"We were definitely more busy," he said. "I can't say it was a lot of deals, but it felt busier."

There aren't any sales formally announced for the coming week. There is the possibility that the planned senior notes from Rio Tinto Finance USA Ltd. could price, a source said.

The mining company announced earlier in the week that it is selling bonds in connection with a tender offer for $2.5 billion in outstanding notes.

Otherwise, issuance depends on how the market tone is. It was down for much of the week as large banks reported third-quarter earnings and some had losses.

Many companies have already reported, so that means issuance could pick back up, one source said.

"We had a solid week," he said. "There could be more high-level names borrowing at the [low] rates we're seeing."

The joke going around Friday about eBay Inc.'s new deal - its first - was whether "you can buy eBay bonds on eBay," a trader said.

The online marketplace's $1.5 billion of senior notes (A2/A/A) sold in three tranches on Thursday and continued to tighten in secondary trading.

So did the new debt from Wal-Mart Stores Inc.

Shorter-dated notes from eBay and Wal-Mart were "gobbled up" this week by investors, a trader said.

"The shorter maturities - those tightened up pretty well, and you didn't see much of them coming back out on the Street," the trader said.

In trading, volume was light on a quiet market tone, not surprising for a Friday, sources said.

"Volume looks on the light side," a source said. "Spreads have tightened up a bit."

Overall investment-grade Trace volume dropped 15% to about $10.5 billion, a source said.

The Markit CDX Series 14 North American investment-grade index came in 1 basis point to a spread of 96 bps on Friday, according to Markit Group Ltd.

No economic data on Friday made for mixed trading in Treasuries. The 10-year benchmark note yield rose 2 bps to 2.56%. Longer bonds rose, sending yields down. The 30-year bond yield fell 3 bps to 3.93%.

EBay narrows

Activity in eBay's three tranchcs of high-grade debt firmed in the secondary market on Friday, a trader said.

A $400 million tranche of 0.875% notes due 2013 priced at a spread of Treasuries plus 42 bps.

"Early this morning, the three-years were offered at plus 31," a trader said.

The $600 million of 1.625% notes due 2015 were sold at 57 bps over Treasuries and offered on Friday at 52 bps.

The tranche of $500 million in 3.25% notes due 2020 priced at Treasuries plus 77 bps. The notes firmed in the secondary to 73 bps bid, 72 bps offered, the trader said.

The issuer is based in San Jose, Calif.

Wal-Mart long-dated bonds active

Wal-Mart Stores priced a mammoth deal of $5 billion of senior notes (Aa2/AA) in four tranches at the start of the week, and the shorter-dated maturities were quickly snapped up, according to a source.

The $750 million tranche of 0.75% notes due 2013 priced at Treasuries plus 30 bps. In the secondary on Friday, "less than a million was offered at 25 over," a trader said. "Not seeing much on the short ones at all."

The $1.25 billion of 1.5% notes due 2015, which priced at Treasuries plus 48 bps, were quoted early Friday morning at an offer of 43 bps.

More trading was seen in the longer-dated notes.

Wal-Mart's largest tranche, $1.75 billion of 3.25% notes due 2020, priced at a spread of 78 bps over Treasuries and firmed slightly in afternoon trading. The notes were seen at 77 bps, 75 bps offered.

The fourth tranche of $1.25 billion in 5% bonds due 2040 sold at Treasuries plus 115 bps. The bonds firmed in trading to an offer of 106, according to the trader.

The discount retailer is based in Bentonville, Ark.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.