Wells Fargo adds to floaters, week ends with single-digit issuance; secondary sees little activity

By Andrea Heisinger

New York, Aug. 22 - The week ended quietly, with many investors and traders on vacation and companies not wanting to brave the market.

Wells Fargo & Co. added to an issue from earlier in the week, providing about the only action in the primary.

Comments on the economy from both Federal Reserve chairman Ben Bernanke and Berkshire Hathaway head Warren Buffett likely kept anyone out of the market that had been considering pricing.

The secondary market was similar to the primary, with little end-of-the week action.

Wells Fargo adds to floaters

Wells Fargo added to its recent issue of three-year floating-rate notes Friday.

The financial services company brought another $20 million to add to its $300 million issue priced Thursday, bringing the total to $320 million.

The extra notes priced at par to yield three-month Libor plus 65 basis points, the same as the original pricing.

Morgan Stanley & Co., Inc. was agent for the added notes.

Week ends with low volume

The week ended with a little more than $2.8 billion in new issues, which was a sharp decline from the previous week's $15 billion.

Sources had predicted the slowdown, precipitated by vacations and market conditions.

Toward the end of the week, the investment-grade market tone was dragged down by worries about the fate of mortgage lenders Fannie Mae and Freddie Mac.

The coming week is expected to be even lighter in volume as companies take a break leading into the long Labor Day weekend, and traders use up vacation time.

"We don't expect much," one source said Friday. "There may be a couple of small things, like yesterday's Washington Gas Light."

A backlog has been building in the last week or two, and will continue next week.

"September looks like it's going to be really busy," the source said. "Everybody's kind of packing it in right now."

The previous week's issuance total was helped by a few large issues from financial names toward the end of the week. That was not the case this week.

"I don't think we're going to see any big deals again until after Labor Day," a source said.

Secondary sluggish

The secondary market, following suit with the primary, was "very quiet," as one source reported. Aside from a lack of new issues to watch levels on, there were also not many companies reporting earnings to end the week.

The source said he was not tracking any particular issuers, as there hadn't been any significant changes in outstanding bonds for the day.

"It's just a very quiet Friday," he said. "There's not anything going on on the Street either. I would call this a very slow day. We're all just trying to stay awake."

Wednesday's issue of 5.125% five-year notes from Bank of New York Mellon Corp. was seen unchanged from Thursday's level when it tightened sharply.

In mid-afternoon trading, the notes were seen at 208 bps bid, from pricing at 220 bps two days earlier.

One of the day's largest movers was Merrill Lynch, with its 7.75% 30-year notes seen more than 25 bps tighter.

A secondary source said these notes were not on his radar, and he wasn't certain why they moved so much.

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