Manitoba sells 10-years; corporate issuance stalls; Citigroup, Bank of America trade actively

By Aleesia Forni and Andrea Heisinger

New York, Aug. 29 - Issuance in the investment-grade primary market remained at a crawl on Wednesday as desks emptied out and the hope of any sizeable issuance until after Labor Day waned.

The Province of Manitoba was in the market with a $600 million offering of 10-year bonds. The sale went overnight from Tuesday.

There was a sale of five-year Treasury notes in the early afternoon, but "really no reaction" in the market, a source said.

Elsewhere, there was news that economic growth in the second quarter was more than expected, according to a report from the Commerce Department. Home sales were also up for July.

Syndicate sources did not seem optimistic about any more deals for the week.

"We haven't seen any corporates at all, so it's not going to happen," one source said. "They would have done it already."

So far the week's new deals have come exclusively from sovereign issuers, including KfW on Tuesday.

Of the secondary market, one source commented that there "just doesn't seem [to be] much going on."

Bonds from Citigroup and Bank of America were among the day's most active deals in trading, though the bonds were mixed in the secondary.

Manitoba's global bonds

The Province of Manitoba priced $600 million of 2.1% 10-year global debentures (Aa1/AA/) to yield Treasuries plus 43.9 bps, a market source said.

The deal had been announced on Tuesday and went overnight to allow participation from a broader range of investors, the source said.

Bookrunners were CIBC World Markets Corp., HSBC Securities (USA) Inc., National Bank of Canada Financial and Scotia Capital (USA) Inc.

Proceeds are being used for advances to Manitoba Hydro and/or for general government programs.

The issuer is based in Winnipeg.

Citi widens

The secondary market saw Citigroup's 6.375% notes due 2014 widen 9 bps to 173 bps bid from Tuesday's levels.

The bank priced $2.5 billion of five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

Bank of America

Meanwhile, Bank of America's 7.625% notes due 2019 tightened 10 bps to 229 bps bid.

The bank priced $2.5 billion of the notes on May 8, 2009 at 410 bps over Treasuries.

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