Aegon, Madison Gas & Electric price issues; week ahead hinges on Feds meeting

By Andrea Heisinger

Omaha, Sept. 14 - The largest issue pricing Friday came from Aegon NV with $1 billion of 7.25% perpetual capital securities, bringing the week's new issue volume to more than $22 billion.

Aegon's issue has a price of $25 per security.

Madison Gas and Electric Co. also priced an issue Friday, offering $25 million in 30-year 6.247% medium-term notes at a spread of Treasuries plus 150 basis points, priced at par with a yield of 6.247%.

Terms were announced for Enel Finance International's upsized $3.5 billion issue in three tranches. It was talked at $3 billion.

This past week's activity was similar to last week's, when more than $21.6 billion came to market.

Larger offerings included IBM Corp. with $3 billion in 10-year notes, KfW with $4 billion in two-year global notes, Schering-Plough Corp. with $2 billion of senior notes in two tranches upsized from $1.5 billion, J.P. Morgan Chase & Co. with $2 billion in five-year senior floating-rate notes, and two units of American Express Bank issuing a total of $2 billion in 10-year notes.

There were also several under the $1 billion mark.

BlackRock, Inc. priced $700 million in 10-year notes, American General Finance Corp. had $600 million of notes in two tranches upsized from $300 million and Florida Power Corp. d/b/a Progress Energy Florida priced $750 million of first mortgage bonds in two tranches.

DCP Midstream LLC issued $450 million in 30-year bonds, Hasbro, Inc. priced $350 million of 10-year notes downsized from $600 million, Compass Bank had $350 million of 10-year notes and HRPT Properties Trust priced $250 million in senior unsecured notes due 2018.

Charles Schwab Corp. priced $250 million of 10-year notes and Connecticut Light & Power Co. priced $200 million of first mortgage bonds in two tranches.

FPL Group Capital Inc. priced two different issues this week. One was $350 million of 60-year junior subordinated notes and the other was $250 million of 60-year junior subordinated debentures.

Also issuing this week was Alabama Power Co. with $150 million of preferred stock.

Bank of America Corp. reopened two issues, adding $225 million to its $550 million of five-year floaters that priced Sept. 6. The bank also reopened its issue of five-year senior notes that priced Sept. 11, adding to the $650 million principal amount.

Watching the Fed

What happens in investment-grade next week hinges on what the Federal Reserve decides during a meeting Tuesday, a market source said.

"I don't think that will do anything with the market," one source said. "If they decide to do something goofy, it will."

Volume stays high

Volume this week was normal or above normal, following the record month of August, sources said, when close to $90 billion in new issues priced. There has been more than $40 billion for the first half of September.

New issues could slow down next week, one trader said.

"I think a lot of people are thinking it will be slower," they said. "Monday, Wednesday and Thursday there will be issuers. Tuesday will be nothing."

Prospective issuers could have some trepidation about issuing Monday before the Fed meeting, a source said.

"Monday if I had an issuer who was deciding between a go or no go I would tell them go, but that's just me," the source said.

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