Enterprise Products, John Deere, Enbridge; Questar, HSBC announce deals; Deere gains in trading

By Andrea Heisinger and Paul Deckelman

Omaha, March 31 - The week got off to a solid start Monday after stable market conditions carried through the weekend, leading to issues pricing from Enterprise Products Operating, LLC, John Deere Capital Corp., Enbridge Energy Partners and HSBC Finance Corp.

Other deals were announced but not expected to price until Tuesday.

In the investment-grade secondary market Monday, advancing issues led decliners by about a three-to-two ratio, while overall market activity, reflected in dollar volumes, rose about 2% from Friday's pace.

Spreads in general widened a bit, as Treasury yields tightened, the yield on the benchmark 10-year note, for instance, shrinking by 3 basis points to 3.41%.

The new John Deere Capital 10-year bonds were seen having firmed solidly from their issue price, with five-yield piece estimated to have also done well.

Among the financial issues, Morgan Stanley's recently priced bonds - which are trading somewhat wider than the levels at which they priced last week - were seen having tightened a little from more bloated earlier levels.

Bear Stearns and Deutsche Bank bonds were meantime seen tightening up.

Enterprise within talk

Enterprise Products priced $1.1 billion of senior notes in two tranches.

The $400 million 5.65% five-year tranche priced at 99.906 to yield 5.672% with a spread of Treasuries plus 322 bps.

This was within price talk of 320 to 325 bps, a market source said.

The $700 million of 6.5% notes due 2019 priced at 99.866 to yield 6.519% with a spread of Treasuries plus 310 bps.

This was also in line with price talk of the 310 bps area.

Bookrunners were Lehman Brothers Inc., Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Scotia Capital.

John Deere Capital priced $750 million in two tranches.

The $250 million 4.5% five-year medium-term notes priced at 99.836 to yield 4.537% with a spread of Treasuries plus 208 bps.

The $500 million of 5.35% 10-year notes priced at 99.694 to yield 5.39% with a spread of Treasuries plus 198 bps.

Merrill Lynch, Pierce, Fenner & Smith Inc. and Deutsche Bank Securities Inc. were bookrunners.

Enbridge sells $800 million

Enbridge Energy priced $800 million of notes in two tranches in a Rule 144A deal.

The energy company priced $400 million 6.5% 10-year notes at Treasuries plus 315 bps and $400 million 7.5% 30-year notes at Treasuries plus 325 bps.

Banc of America Securities LLC, Deutsche Bank and HSBC Securities were bookrunners.

HSBC Finance priced $333.75 million senior unsecured notes in two tranches.

They priced $166.318 million of 5.5% three-year notes and $167.432 million of 6% five-year notes.

Joint lead managers and lead agents were Banc of America, HSBC and InCapital, LLC.

Questar, HSBC coming

Other deals announced but not priced Monday included those from Questar Market Resources, Inc. and HSBC Holdings plc.

Questar announced in a Securities and Exchange Commission filing that it will price notes via Banc of America.

A source close to the deal said it is Tuesday's business.

Proceeds will be used to reduce short-term bank loans incurred in February and March, with the remainder to be used to reduce intercompany short-term debt owed to parent company Questar Corp.

HSBC plans to price perpetual subordinated capital securities exchangeable by the issuer into non-cumulative dollar preference shares.

They will be priced at par of $25.

It is a two-day deal and will likely price Tuesday or Wednesday, a source close to the deal said.

Proceeds will support development and strengthen the company's capital base.

HSBC, Citigroup, Merrill Lynch, Morgan Stanley & Co. Inc. and UBS Investment Bank are bookrunners.

Strong issuance expected

With the stable start to the week, it is likely that there will be healthy issuance in the coming days.

"It was pretty quiet today, but there are a few issuers looking at getting in tomorrow," a market source said.

Many financials are in blackouts, and many brokerages have already come to the market, the source said.

Recent weeks have had steady business, despite many financial names holding off on issuing after the JPMorgan and Bear Stearns news.

The month of March had a surprising amount of issuers, a source said.

"It was more than some people expected," he said. "There were a lot more $300, $500 [million] deals than we had been seeing. There was a lot more volume because a lot of the bigger issuers - brokers and banks - weren't issuing because of earnings or blackouts or the Bear Stearns news."

The monthly total was also lower than February, which wasn't surprising to some after the year got off to a record start in January.

"So many people issued right off the bat the first couple months of the year, that of course it was going to slow down," a source said. "It was definitely lower than February, even though there may have been more issuers."

Provided stability bleeds into Tuesday, and the stock market remains up, there should be a handful more names coming into the market.

"I think we'll see a few more deals tomorrow," a source said.

Deere narrows

A trader saw the new John Deere 5.35% notes due 2018 trading at around 189 bps bid, 187 bps offered, well in from the level at 198 bps over Treasuries at which those bonds had priced earlier in the session.

Although he had not actually seen the company's new 4.50% notes due 2013, which had priced at the same time at 208 bps over, he surmised that "if the 10-year did 8 bps, 9bps better, the 5-year probably did quite well, as well.

While he saw the new Enbridge Energy offering - the 10-years priced at 315 bps over, the 30s at 325 bps over - he said it had "just priced" late in the day and was not moving around in the aftermarket.

Lehman better ahead of converts deal

At another desk, a trader said that things were "very quiet," with the attention of many in the financial sector riveted on Lehman Brothers' plans for its big convertibles deal, aimed at shoring up the investment bank's capital position.

He said that Lehman paper was "doing better during the day," before the announcement, "so I don't see that there was any huge need for it."

For instance, a market source said, Lehman's 6.75% notes due 2017 came in to 363 bps over, versus their levels at 376 bps over late last week.

Morgan Stanley issue firms from wide points

The trader saw Morgan Stanley's recently priced 6.625% notes due 2018 - which had priced at 290 bps over on Thursday - still trading well above that level after having widened out on Friday. But the bonds had tightened some off their lows. He saw them at 307 bps bid, 305 bps offered, after starting the day at 315 bps bid.

A market source at another shop saw the Morgan Stanley issue get as good as 299 bps during the session.

A third saw the bonds at 306 bps bid, about 12 to 15 bps tighter than Monday's levels.

Among other financial names, Bear Stearns' 7.25% notes due 2018 were seen having firmed about 15 bps to 330 bps bid, while Deutsche Bank's 5.375% notes due 2012 also picked up 15 bps, taking the yield down to the 180 bps level.

A trader said that credit-default swap costs of major brokerage firms was about unchanged to 5 bps better, while bank CDS costs were mostly unchanged. Thrift operator Washington Mutual's debt-protection costs were 10 bps better.

Lehman's debt-protection-costs showed no immediate reaction to the company's plans to sell $3 billion of convertible notes, although he allowed that maybe there might be some activity on Tuesday, after investors have had a night to sleep on the plan, announced late in the day Monday. Lehman's pre- and post-news CDS spread cost stood at 290 bps bid, 300 bps offered.

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