Staples, Kexim, Indiana Michigan Power, Norfolk Southern price; new deals mostly tighter in trading

By Andrea Heisinger

New York, Jan. 12 - Another week got off to a strong start Monday with sales of bonds from Staples Inc., Export-Import Bank of Korea, Indiana Michigan Power Co., Norfolk Southern Corp., Berkshire Hathaway Funding Corp. and Toyota Motor Credit Corp.

It was a mix of names, which is a trend that will likely continue, a market source said. It was also another day with a lack of issues backed by the Federal Deposit Insurance Corp.

The secondary was reasonably busy, with big moves by a couple of financial names and new issues mostly tighter after pricing.

Staples raises $1.5 billion

Staples, the Framingham, Mass.-based office supply retailer, priced $1.5 billion of 9.75% five-year notes late Monday, a source close to the deal said.

The notes priced at par to yield 9.75%, or Treasuries plus 828.9 basis points. The deal priced at the coupon, he said.

Barclays Capital Inc., Banc of America Securities LLC and HSBC Securities ran the books.

Indiana Michigan prices notes

A subsidiary of American Electric Power, Indiana Michigan Power priced $475 million of 7% 10-year senior notes Monday at 99.326 to yield 7.096%, or Treasuries plus 475 bps.

The deal came at the tight end of talk, which was 475 bps to 487.5 bps, a source close to the sale said.

It went well, he added, and was a "fairly simple deal." It was among the first bonds to price for the day.

Books were run by BNP Paribas Securities, Banc of America Securities and Credit Suisse Securities.

Norfolk Southern sells privately

A $500 million note offering from Norfolk Southern priced under Rule 144A Monday. The 5.75% notes due 2016 priced at 99.557 to yield 5.828%, or Treasuries plus 400 bps.

This was at the tight end of talk, which was 400 bps to 412.5 bps.

A source said the sale "went quickly and was pretty much presold."

Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and UBS Investment Bank ran the books.

Berkshire Hathaway reopens

Diversified holding company Berkshire Hathaway reopened a Rule 144A issue of 5.4% notes due 2018 to add $250 million Monday.

The notes priced at 106.5 to yield 4.536%, or Treasuries plus 220 bps. This is in comparison to the 155 bps over Treasuries the original issue priced at in May 2008.

Morgan Stanley & Co. Inc. ran the books.

A market source said he wasn't surprised to see a financial name getting a deal done in the current market.

"They're Berkshire Hathaway, so they can always get something done," he said.

Kexim prices $2 billion

The Export-Import Bank of Korea priced $2 billion five-year notes at Treasuries plus 677 bps.

The deal was about two times oversubscribed, a trader said, and about 12 bps tighter at the end of trading.

Toyota unit reopens floaters

Toyota Motor Credit reopened its issue of floating-rate medium-term notes due 2010 Monday to add $42.5 million.

The reopened notes priced at 100.0287 with a coupon of three-month Libor plus 125 bps.

This makes the total issuance $192.5 million, including $150 million that settles Jan. 13.

Agents were Banc of America Securities, Barclays and Citigroup.

Goldman reopens FDIC notes

Goldman Sachs Group Inc. announced terms Monday for a reopening of its FDIC-backed floaters due 2011 that was done Jan. 8.

The $300 million reopening of the notes priced at 101.021 with a coupon of one-month Libor plus 80 bps.

Total issuance is $1.05 billion, including issues from Dec. 5 and Dec. 17.

Goldman Sachs & Co. ran the books.

Primary on course

The primary market Monday was much as predicted at the end of the previous week, a source said.

"We thought it would be busy, and it was," he said. "Things weren't too bad out there today, so people could get stuff done."

Tuesday will also bring a healthy dose of issuance, he said, with a mix of names. Some, such as JPMorgan Chase, will not be issuing anything this week, FDIC-backed or not.

The company decided to move its quarterly earnings announcement up to Jan. 15, which is six days earlier than planned.

It's not clear whether the company is planning on doing any more FDIC-backed notes soon.

"They don't have anything coming out that I know of," a source said. "I guess they could be doing something depending on how bad the earnings are."

Tuesday has potential to have more new deals than Monday.

"It could be bigger," a source said. "We don't have any specific names, but there are some that could come as early as tomorrow."

Indiana Michigan notes in

The new 7% notes due 2019 from Indiana Michigan Power were seen tightening modestly from their 475 bps price, a trader said late Monday afternoon.

The notes were at 468 bps bid, 464 bps offered.

Norfolk Southern tightens

The new 5.75% notes due 2016 from transportation company Norfolk Southern were seen in slightly after pricing at 400 bps over Treasuries.

The notes were quoted at 394 bps bid, 384 bps offered, a trader said in late afternoon.

Altria Group top traded

An issue of 9.7% notes due 2018 from Altria Group Inc. was seen as the most-traded high-grade bond by early Monday afternoon.

At the end of last week, the company was placed on some lists of top stocks of 2009. The company recently completed its acquisition of smokeless tobacco company UST.

The rest of the high-volume deals came from a mixed bag of names, including Bank of America NA, America Movil SA, General Electric Capital Corp. and Telecom Italia Capital SA.

Hartford, Capmark big movers

Hartford Financial Services Inc. was seen as one of the day's big movers, with its 4.625% notes due 2013 seen tightening more than 170 bps by late afternoon.

The company's shares were one of a handful of life insurer names that dipped Monday after being listed as vulnerable to credit deterioration in the coming year.

At the other end was Capmark Financial, whose 5.875% notes due 2012 widened nearly 150 bps.

Bank, broker CDS widen

Bank-name credit default swaps were seen 15 to 35 bps wider late Monday, a trader said. Broker names were seen 5 to 25 bps wider.

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