Bank of Tokyo, Manitoba, Santander price bonds, Delphi Financial plans sale; new UBS eases

By Andrea Heisinger and Cristal Cody

New York, Jan. 13 - Bank of Tokyo-Mitsubishi UFJ, Ltd., Province of Manitoba and Santander US Debt SA Unipersonal each got bond deals done in the high-grade market on a Wednesday that was once more heavy on sales from overseas names.

Bank of Tokyo-Mitsubishi UFJ sold $2 billion in three- and five-year notes early in the day. The sale, which was evenly split between the tranches, had gone overnight from Tuesday.

Manitoba sold $600 million of global notes due in 2013 by mid-afternoon.

Another sale from overseas was the $1.5 billion sale in two tranches from Spain's Santander US Debt. The issuer priced $500 million of three-year notes and $1 billion of five-year notes.

From the United States, Delphi Financial Group, Inc. announced plans for a $250 million sale of 10-year notes. They are set to price on Thursday morning.

Meanwhile Brocade Communications Systems, Inc. sold a split-rated $600 million of eight-year and 10-year notes late in the day at the tight end of price talk.

With the relatively light volume in the market, there was "not much to talk about," a syndicate source said at the end of the day.

"There was zero excitement," he said of the day's deals. "You could call it boring."

The secondary high-grade market showed a better tone on Wednesday as Treasuries eased, though the bid side was not strong, sources said Wednesday.

On Wednesday, the yield on the 10-year Treasury note slipped 8 bps to 3.79%. The 30-year bond yield rose to 4.71% from 4.62% a day earlier.

Meanwhile, the CDX Series 13 North American high-grade index stayed unchanged at a mid bid-asked spread level of 79 bps, according to a market source.

One trader said that high-grade bond "spreads are a little wider today" by about 0.50 bps.

By late day, trading was at a "decent volume" and hit about $9.5 billion, a source said.

But a trader had a different view.

"Yesterday widened out a little bit. Today, some things are a little better," he said. "The bid side is not as strong, but it's got a little better tone than yesterday."

One trader is "hearing money's out there waiting to be placed," but investors are "preferring to wait for new issues rather than secondaries."

While the financials sector had widened a day earlier, it was mixed on Wednesday, according to sources.

Among specific names, sources expect to take a look at Santander's notes but are unsure of the level of trading. Also, in the financials sector, the five-year notes from UBS AG, Stamford Branch moved out in secondary trading after pricing Tuesday.

Bank of Tokyo prices $2 billion

Continuing the year's heavy presence of deals from non-U.S. issuers, Bank of Tokyo-Mitsubishi UFJ priced $2 billion of notes in two tranches early in the afternoon, a syndicate source away from the deal said.

The transaction was announced early on Tuesday and went overnight.

A $1 billion tranche of 2.6% three-year notes sold at a spread of 112.5 bps over Treasuries.

The $1 billion of 3.85% five-year notes priced at Treasuries plus 135 bps.

Bank of America Merrill Lynch, Morgan Stanley & Co. and Mitsubishi UFJ Securities ran the books.

The financial services company is based in Tokyo.

Manitoba sells global notes

Canada's Province of Manitoba priced $600 million of 2.125% global debentures due 2013 at Treasuries plus 66.68 bps, a market source said.

The deal had a quick turnaround time, a source commented, as it was announced in early afternoon and priced shortly after.

"I don't know - maybe they had it planned in the morning, but just didn't file until later," the source said. "It could have even gone overnight."

Bank of America Merrill Lynch, CIBC World Markets and the National Bank of Canadian Finance are bookrunners.

Proceeds are being partially used to fund advances to the Manitoba Hydro-Electric Board, which will use them to repay outstanding debt and to fund capital programs.

The issuer is based in Winnipeg, Canada.

Santander unit prices two tranches

Santander US Debt SA Unipersonal priced $1.5 billion of senior notes in two tranches late in the afternoon, a source away from the sale said.

The $500 million tranche of 2.485% three-year notes priced at a spread of 100 bps over Treasuries.

A $1 billion tranche of 3.724% five-year notes was sold at Treasuries plus 120 bps.

The tranches were priced under Rule 144A.

J.P. Morgan Securities and Morgan Stanley were on the books.

The unit of the financial services company Banco Santander SA is based in Madrid, Spain.

New deals dull

Following two days of steady, if unexciting issuance, Wednesday was a combination of the two factors.

"There was not much out there," a market source said. "There were deals, but they were all weird."

All of the sales were from government or financial entities based in other countries.

The lone domestic deal was the split-rated bonds from Brocade Communications that was mostly dealt with on the high-yield side of the market.

"I don't think anyone really paid attention to that one," a high-grade source said of the sale. "It basically was a junk deal."

There are few new deals expected for the remaining two days of the week. Delphi Financial is expected to price its small offering early on Thursday.

Syndicate sources said that otherwise, "things are kind of dead ahead of the weekend," the high-grade source said. He was referring to the long weekend ahead of the Martin Luther King Jr. holiday on Monday.

Delphi Financial plans 10-year sale

Delphi Financial Group announced the sale of $250 million in 10-year senior unsecured notes, according to a 424B5 filing with the Securities and Exchange Commission

The notes are set to price on Thursday morning, a source close to the sale said late in the day. There is not formal price talk for the sale yet, he added.

Bank of America Merrill Lynch and Wells Fargo Securities are bookrunners.

Proceeds are going for general corporate purposes and debt repayment, including that outstanding under a revolving credit facility.

The holding company for subsidiaries' employee benefit services is based in Wilmington, Dela.

Brocade brings split-rated deal

Brocade Communications Systems sold $600 million of split-rated senior secured notes (Ba2/BBB-) late in the day in two tranches, a source close to the deal said.

The sale was done off the high-yield syndicate desks.

The $300 million of 6.625% eight-year notes priced to yield 6.75% with a spread of Treasuries plus 329 bps. They sold at the tight end of price talk which was at a yield of 6.75% to 7%.

A $300 million tranche of 6.875% 10-year notes priced to yield 7% with a spread of 322 bps over Treasuries. They priced at the tight end of guidance at a yield of 7 to 7.25%.

They were sold under Rule 144A and Regulation S following a road show that began on Jan. 11.

J.P. Morgan Securities and Goldman Sachs & Co. were on the books.

Proceeds will be used to retire $173 million in outstanding subordinated convertible notes originally issued by wholly-owned subsidiary McDATA Corp.

The data networking solutions company is based in San Jose, Calif.

Santander secondary levels unclear

Santander priced its notes in three- and five-year tranches later Wednesday, but sources were unsure how much activity the bonds will see in secondary trading.

The $500 million in three-year notes priced at Treasuries plus 100 bps, while the $1 billion in five-year notes priced at 120 bps over.

One trader expects some next-day activity in the secondary, but was "not sure how much of it would actually trade."

UBS moves out

The new notes due 2015 from UBS widened in the secondary, a trader said.

"It looks like it's 154 bps, 150 bps offered."

The Switzerland-based financial services company priced $1.5 billion of 3.875% notes at Treasuries plus 150 bps on Tuesday.

Wells Fargo tightens 30 bps

Other financials were mixed on Wednesday.

Bank of America Corp.'s 6.5% notes due 2016 widened 6 bps to 115 bps over, according to a source. The Charlotte, N.C.-based bank's other outstanding notes did not register many changes, according to a source.

Also on Wednesday, New York-based Citigroup Inc.'s 8.5% notes due 2019 were quoted by a source at 226 bps over Treasuries from 222 bps over the day before.

But other names in the sector did show some tightening, including Wells Fargo & Co.'s notes due 2011, which according to a source, tightened 30 basis points to 20 bps over. Wells Fargo is a San Francisco-based retail, commercial and corporate banking provider.

The amount of new deals and the barrage of upcoming earnings releases are impacting the markets this week, a trader said.

"People are watching earnings. JPMorgan's release is going to be a big one."

New York-based JPMorganChase & Co. plans to release its fourth quarter earnings on Friday.

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