Nabors Industries, Gulf Power, Nevada Power price in calmer primary; new bonds strengthen

By Andrea Heisinger and Cristal Cody

New York, Sept. 9 - Nabors Industries Inc., Gulf Power Co. and Nevada Power Co. priced investment-grade paper on Thursday as the pace of issuance slowed considerably from the two previous multi-billion-dollar days.

Land drilling and well servicing company Nabors Industries upsized its sale to $700 million from the $500 million announced the previous day. The 10-year notes were priced under Rule 144A and Regulation S.

Two other deals came from utilities that priced by early afternoon. Gulf Power sold $125 million of 30-year bonds, while Nevada Power priced $250 million of 30-year mortgage bonds.

The drop in new issue volume was partly due to the start of the Rosh Hashana holiday, but also because "supply is down," as one market source said. "We all need a breather. I don't think there was anything else ready [to price]."

If any deals come to the market on Friday they will likely be small in size, the source said.

The secondary market continued to have a good tone and was absorbing more than $30 billion in new deals for the week, sources said.

About 90% of the new issues have tightened in secondary trading, a syndicate source said.

Overall investment-grade Trace volume rose 15% to more than $13 billion, a source said.

Secondary trading "seemed surprisingly busy today," a trader said. "Maybe people [are] buying on the dips."

Treasuries fell on Thursday on a weak auction of $13 billion in 30-year bonds at a yield of 3.82%, the lowest yield since March 2009.

"The market remained choppy as a predictably weak 30-year auction tailed despite a healthy early concession," market strategists with Nomura Securities International, Inc. said in a research note.

The yield on the 10-year note jumped 11 basis points to 2.76%. The yield on the 30-year bond closed up 11 bps at 3.84%.

Nabors upsizes to $700 million

Nabors Industries sold an upsized $700 million in 5% 10-year senior unsecured notes (Baa2/BBB+) at Treasuries plus 235 bps after the deal went overnight, a market source said.

The size was increased from the $500 million announced on Wednesday.

The Nabors notes were sold under Rule 144A and Regulation S and are guaranteed by Nabors Industries Ltd.

Citigroup Global Markets and UBS Investment Bank were the active bookrunners.

Proceeds will be used to fund the $900 million acquisition of Superior Well Services, Inc. and for general corporate purposes.

The notes were mixed in secondary trading, a source said.

Soon after pricing, the notes traded at 238 bps bid, 235 bps offered, a trader said.

Late in the day, the debt was seen wider on the bid side at 237 bps bid, 232 bps offered, according to another source.

The land drilling and well servicing rigs operator is based in Hamilton, Bermuda.

Market tone holds

Despite a pullback on the number of deals pricing, the tone of the high-grade market remained stable for the day.

"I would say it's holding in nicely," a syndicate source said. "It's not as busy, and we're not seeing much for Friday, but I would say it's doing well."

The coming week is expected to be busy, although probably not with as much new issue volume as the past two days.

There has been about $32 billion in new deals so far this week, a market source said.

The number of deals on Tuesday may have been an all-time record, the syndicate source said.

The market source added that the short window of time between the end of the long Labor Day weekend and the start of the Jewish holiday "amped up issuance."

"They [companies] thought they needed to get in now if they at all wanted debt priced," the source said.

Gulf Power taps market

Gulf Power sold $125 million of 5.1% 30-year senior unsecured bonds (A3/A/A) early in the day to yield Treasuries plus 130 bps, according to an FWP filing with the Securities and Exchange Commission.

There was no official price talk on the deal since it priced so early, a source said.

Bookrunners were Goldman Sachs & Co. and RBS Securities.

The proceeds are being used for the redemption of all or a portion of $40 million in 5.75% senior notes due Sept. 15, 2033 and/or $35 million of 5.875% senior notes due April 1, 2044. Proceeds will also be used to repay a portion of outstanding short-term debt and for general corporate purposes, including a continuous construction program.

No secondary activity was seen on the bonds.

The electric utility is based in Pensacola, Fla.

Nevada Power sells $250 million

Nevada Power, which does business as NV Energy, sold $250 million of 5.375% 30-year series X general and refunding mortgage bonds (Baa3/BBB/BBB) at Treasuries plus 160 bps, according to an FWP filing with the SEC.

Barclays Capital and J.P. Morgan Securities were the bookrunners.

Proceeds are going to redeem $206 million of unsecured tax-exempt local furnishing bonds issued with rates ranging from 5.5% to 5.9% and $20 million in unsecured tax-exempt pollution control refunding revenue bonds with rates between 5.3% and 5.45%. The remainder will be used to repay amounts under a revolving credit facility with Wells Fargo Bank maturing in April 2013.

In the secondary market, the bonds were strong, according to sources.

The bonds firmed to 152 bps bid, 151 bps offered soon after pricing, one source said.

In late afternoon trading, the debt was quoted at 152 bps bid, 150 bps offered.

"Had seen 155 bid earlier," a trader said.

The electric utility is based in Las Vegas.

Bank CDS costs tighten

The cost of credit default swaps contracts protecting holders of bank paper against event of default was 5 bps tighter to even, a source said Thursday.

Also, the brokerage/investment bank CDS costs firmed 5 bps to 3 bps.

Stephanie N. Rotondo contributed to this report

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