High-grade bond sales halt despite good tone; new industrials improve; AmEx Credit gains

By Andrea Heisinger

New York, Aug. 21 - New industrial bonds took center stage in trading Friday as some of the most recent investment-grade bond deals improved across the board.

Perhaps the largest improvement came from the two-tranche sale by News America Inc. Both bonds were 30 to 40 basis points tighter.

A new issue from American Express Credit Co. was also better a day after pricing. Two bonds from Citigroup Inc. were seen trading heavily as of early afternoon, a trader said. Citigroup bonds have been active for much of the week.

Two new split-rated bonds from Watson Pharmaceuticals Inc. were also popular with investors - not only in the high-grade secondary but also on the high-yield side.

Spreads were uniformly tighter as Treasury yields moved much wider. The five-year note was out 16 bps and the 30-year bond was 13 bps wider.

New issuance absent

Two syndicate sources said that there were no new offerings to be had in the high-grade primary market Friday.

"It was really dead," one of the sources said. "[It was] pretty boring, actually."

There was nothing wrong with the day, in general, but issuance was mostly exhausted for the week, he said.

"We had a positive tone today," he said. "It was good. Hopefully that will spill over into Monday."

The lack of deals came after a mostly active week with several solid new offerings from both industrial and financial names.

A source from a smaller syndicate desk said there are "a few deals lined up" for the coming week.

Yum! bonds gain

Tranches of six- and 10-year notes from restaurant chain operator Yum! Brands, Inc. were improved a day after selling, a trader said Friday afternoon. Both tranches priced at Treasuries plus 187.5 bps.

The 4.25% bond due 2015 was quoted Friday at 165 bps bid, 160 bps offered.

A 5.3% bond due 2019 was improved, but to a lesser degree, at 180 bps bid, 177 bps offered.

News America tranches surge tighter

Two tranches of bonds priced Thursday from media conglomerate News Corp. subsidiary News America were trading significantly better than where they were sold, a trader in the non-financial sector said Friday afternoon.

The 5.65% tranche due 2020 was sold at 223 bps over Treasuries and was quoted at 197 bps bid, 192 bps offered.

A 6.9% tranche of bonds due 2039 was even tighter, coming in to 232 bps bid, 228 bps offered. The bond priced at Treasuries plus 265 bps.

AmEx Credit bond in 10 bps

The new 5.125% bond due 2014 from American Express Credit was quoted better on Friday than its trading level on Thursday, a trader said.

The bond sold at 275 bps over Treasuries and was quoted at 266 bps bid, with no offer. The level was nearly unchanged after pricing, quoted at 274 bps bid, 265 bps offered.

Viacom bonds remain better

Both tranches of bonds priced Wednesday by Viacom Inc. remained tighter by Friday, at least by a few basis points, a trader said.

The 4.375% bond due 2014 was the better-performing of the two. It sold at 210 bps over Treasuries and was quoted Friday at 184 bps bid, 180 bps offered.

The 5.625% due 2019 was about 5 to 10 bps better than its price of 225 bps over Treasuries. It was quoted at 219 bps bid, 215 bps offered on Friday.

Citigroup bonds top-traded

Two bonds from Citigroup were among the most popular of the day, a trader said early in the afternoon.

An 8.5% bond due 2019 was at the top of trading, while a 6.5% issue due 2013 was near the top. Citigroup has had bonds trading heavily for much of the week.

Two notes from a recent split-rated deal from Watson Pharmaceuticals were trading heavily in both the high-grade and high-yield markets.

The 5% bond due 2014 from the issuer was popular on the high-grade side. Both this tranche and a 6.125% tranche due 2019 priced in the same offering were at the top of high-yield trading.

Dow, AmEx bonds top movers

Outstanding bonds from American Express and Dow Chemical Co. were among those making the biggest shifts in trading levels from a week ago, a source said.

The credit card arm of American Express successfully sold $1.5 billion of notes Thursday.

Dow Chemical bonds have remained active since the company priced a new issue at the beginning of August.

The company's 5.7% bond due 2018 was about 50 bps better than a week ago.

A 7% bond due 2018 from American Express was about 40 bps better than the previous week's level.

Another AmEx bond did not do so well. A 7.25% bond due 2014 was about 25 bps worse than the previous week.

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