Barclays leads day with $1 billion; CBS, Health Care REIT also price, both gain in trading

By Sheri Kasprzak

New York, March 30 - Investment grade primary action heated up on Tuesday as issuers hoped to price ahead of the holiday weekend.

"I imagine if things are going to price, they're going to price today [Tuesday] or tomorrow [Wednesday]," said one sellsider reached during the session.

Amid the pricing activity, Barclays plc priced $1 billion in 3.9% senior notes due 2015 while CBS Corp. brought $500 million of 10-year notes. Health Care REIT, Inc. priced $300 million in senior notes, also with a 10-year maturity.

In secondary trading, the new offerings from CBS and Health Care REIT were seen firming, according to sources.

Meanwhile, the CDX Series 14 North American high-grade index widened 1 bp to a mid bid-asked spread level of 86 bps, according to a source.

"Flows seemed light today," a source said.

Overall Trace volume rose about 26% from Monday to more than $11.6 billion on Tuesday, according to a source.

Volume yesterday "was really low," according to a source. "Today seems to be on the lighter side, but not as bad as yesterday."

Also on Tuesday, Treasuries regained lost ground from Monday.

For example, the yield on the 10-year benchmark Treasury note tightened 2 bps to 3.85%, while the yield on the 30-year Treasury bond tightened 3 bps to 4.74%, according to a source.

Barclays brings $1 billion

The day's biggest issued came from Barclays plc, which priced $1 billion in 3.9% senior notes (Aa3/AA-/AA-) due April 7, 2015 at 130 bps over Treasuries.

Barclays was the bookerunner.

Proceeds from the deal will be used to fund general corporate purposes.

London-based Barclays is a financial services provider.

CBS brings $500 million

Also during Tuesday's pricing session, CBS Corp. sold $500 million in 5.75% senior notes.

The 10-year notes (Baa3/BBB-/BBB) were priced at 99.877 to yield 5.766%. The spread was 190 bps over Treasuries.

Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and RBS Securities Inc. were the active bookrunners for the sale, with Bank of America Merrill Lynch and UBS Investment Bank as passive bookrunners.

Proceeds from the offering will be used for general corporate purposes, including the repayment of borrowings, working capital, capital expenditures, acquisitions and stock repurchases.

CBS, located in New York, is a broadcasting and media conglomerate.

Health Care REIT sells $300 million

Elsewhere, Health Care REIT, Inc. priced $300 million in 10-year senior unsecured notes Tuesday.

The 6.125% notes (Baa2/BBB-/) were priced at 99.297 to yield 6.22%. The spread was Treasuries plus 235 bps.

Banc of America Securities LLC, Deutsche Bank Securities Inc., Barclays Capital Inc. and Credit Agricole Securities (USA) Inc. were the joint bookrunners.

The notes were sold under the company's shelf registration.

Proceeds will be used for general corporate purposes, including investing in senior living and health care facilities.

Headquartered in Toledo, Ohio, Health Care REIT is a real estate investment trust that invests in senior living communities.

CBS firms

The $500 million of new 5.75% notes due 2020 that CBS priced at Treasuries plus 190 bps firmed in secondary trading, according to a source.

The notes were seen 4 bps tighter at 186 bps, the source said.

In addition, CBS' existing 7.875% bonds due 2030 were active in trading on Tuesday and were last quoted at 236 bps over Treasuries, one source said.

Health Care REIT stronger

Health Care REIT's new $300 million offering priced earlier on Tuesday was seen firming in the secondary, a source told Prospect News.

The 6.125% senior unsecured notes due 2020 priced at Treasuries plus 235 bps.

One trader was "seeing 220 bps" on the 10-year notes late in the day.

"A bit earlier," the notes were quoted at 223 bps bid, 218 bps offered.

S&P sees investment-grade spreads tighter

Elsewhere, Standard & Poor's measures of investment-grade and speculative-grade composite spreads tightened 1 bp each on Monday to 173 bps and 573 bps, respectively, the ratings agency said in a release on Tuesday.

By credit tier, the spread on AA bonds tightened 1 bp to 120 bps. The A and BBB spreads remained unchanged at 152 bps and 207 bps respectively.

Sector spreads were largely unchanged, with financial institutions, banks, industrials, and utilities remaining at Friday's levels of 269 bps, 237 bps, 298 bps, and 177 bps, respectively, Standard & Poor's said.

Telecommunications tightened 1 bp to 277 bps.

Since their record highs in December 2008, investment-grade spreads have tightened in the range towards their five-year moving averages of 197 bps.

"This is partially attributable to a rough 18% increase in both the moving averages since the beginning of 2009," Standard & Poor's said.

"But, it also reflects a recent optimistic sentiment in the credit markets - particularly the expectations for downgrades and corporate defaults to wane from their current near-record highs and an apparent stabilization in credit quality. We expect credit spreads to compress further, especially for non-financials, as the decoupling of systemic to idiosyncratic risk continues to normalize credit pricing."

Still - "financials might remain volatile because of uncertainty regarding loan losses and some banks' ability to raise capital without government support."

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