Rentenbank sells bonds; primary clears before holiday; Apache widens on oil rig explosion

By Andrea Heisinger and Cristal Cody

New York, Sept. 2 - It was a slow end to a stable but effectively shortened week on Thursday, with Germany's Landwirtschaftliche Rentenbank the only issuer.

The sovereign had announced its sale of seven-year notes as a benchmark amount on Tuesday. The size rose to $1.25 billion for the AAA rated sale.

Other than that, there "wasn't much action" in the primary for the day, as one market source said.

Syndicate desks are expected to thin out early on Friday, with "any deals getting done early," he said.

No upcoming deals have been announced, but it's a possibility that there could be something from a sovereign trying to get in before the U.S. holiday.

There is a "flurry of activity" expected for the coming week, a syndicate source said. Issuance could begin as soon as Tuesday, with more to come on Wednesday. Deals from multiple sectors could take advantage of the low interest rates. The source said that corporates and utilities are especially likely to tap the market for funding needs.

In secondary trading, Apache Corp.'s new bonds widened after an explosion happened at a takeover target's oil rig, a source said.

Corporate bonds in the oil and gas sector stayed strong in the secondary, according to sources.

The Markit CDX Series 14 North American investment-grade index firmed 3 basis points to a spread of 106 bps, according to Markit Group Ltd.

Trading was light overall.

Overall investment-grade Trace volume fell 12% to about $11 billion, a source said.

Treasuries fell in light trading ahead of the three-day holiday weekend.

Closing yields were seen 6 bps higher at 2.63% for the 10-year benchmark Treasury note and up 6 bps at 3.71% for the 30-year bond.

Treasuries were "definitely under pressure yesterday," a source said Thursday. "It rallied so much and was continually rallying for over a month, so it was overdue for a correction."

Rentenbank prices $1.25 billion

Lender to Germany's agriculture and food industry Rentenbank sold a benchmark $1.25 billion of 2.375% seven-year global notes early in the day to yield Treasuries plus 41 bps, a source close to the sale said.

The notes had been talked on Tuesday at the mid-swaps plus 30 bps area.

The notes (Aaa/AAA/AAA) are backed by the Republic of Germany.

The bookrunners were HSBC Securities, J.P. Morgan Securities and RBC Capital Markets.

Proceeds are going to finance lending activities.

The bank is based in Frankfurt.

Apache wider

Apache's new bonds widened in secondary trading after an explosion early in the day at an oil rig in the Gulf of Mexico, a trader said.

"Apache's wider 2 to 5 points," the trader said.

The Houston-based energy company sold the bonds on Aug. 17 at a spread of 140 bps over Treasuries.

The oil and gas rig that exploded off the coast of Louisiana belongs to Mariner Energy Inc.

Apache said in April that it would buy Mariner Energy for $2.7 billion in cash and stock. Both companies are based in Houston.

Oil, gas sectors firm

Bonds in the oil and gas sectors firmed for a second day in secondary trading, according to sources.

"Everything's probably 3 to 5 better," one trader said.

The sectors narrowed 10 bps to 12 bps in trading the previous day as crude oil rose on better manufacturing reports for China and the United States.

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