Western Union, Entergy price bonds; high-grade paper weaker as Treasuries sell off

By Aleesia Forni and Cristal Cody

Virginia Beach, Va., Aug. 19 - The high-grade primary bond market saw Western Union Co. and Entergy Louisiana LLC bring new deals during the session, sources said, as a spike in Treasuries yields aided in keeping issuers on the sidelines.

One market source saw yield on the 10-year note hit 2.86% during Monday's session.

In primary action, Entergy Louisiana sold $325 million first mortgage bonds due 2023 with a spread of Treasuries plus 120 basis points, according to an informed source.

The deal priced at the tight end of the Treasuries plus 125 bps area talk.

Meanwhile, Western Union was in the market with $250 million floating-rate senior unsecured notes due 2015.

The notes priced at par to yield Libor plus 100 bps, according to an FWP filing with the Securities and Exchange Commission.

Volatility in Treasuries along with the typical late-summer lull is expected to keep the pace of the high-grade primary muted this week.

One source noted that he is "not expecting much" to happen during the week with respect to new issuance, echoing comments made last week with sources predicted a $5 billion week.

In the secondary market, Entergy Louisiana's new 4.05% mortgage bonds due 2023 traded 1 bp tighter on the bid side at 119 bps bid, 114 bps offered going out, a trader said.

Western Union's floating-rate notes due 2015 priced on Monday were not active in late afternoon secondary trading.

"Nada," a trader said.

Investment-grade bond spreads widened on Monday as Treasuries continued to sell off on expectations the Federal Reserve will taper its bond purchases in September, according to market sources.

The Markit CDX Series 20 North American Investment Grade index eased nearly 2 bps on the day to a spread of 84 bps.

Entergy mortgage bonds

Monday's primary saw Entergy Louisiana price $325 million of first mortgage bonds due Sept. 1, 2023 with a spread of Treasuries plus 120 bps, according to an informed source and an FWP with the SEC.

The notes sold at 99.689 to yield 4.088%.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Mitsubishi UFJ Securities and Mizuho Securities USA Inc. were the joint bookrunners.

The co-managers were Regions Securities LLC, Scotia Capital (USA) Inc. and SMBC Nikko Securities America Inc.

Proceeds will be used to repay borrowings under the company's $200 million credit facility expiring March 9, 2018 and for general corporate purposes.

Entergy Louisiana is a Jefferson, La.-based energy provider.

Western Union floaters

Also during the session, Western Union sold $250 million floating-rate senior unsecured notes due 2015 at par to yield Libor plus 100 bps, according to a FWP filing with the SEC.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of debt.

The money movement and payment services company is based in Englewood, Colo.

Bank/brokerage CDS up

Investment-grade bank and brokerage CDS costs rose on Monday, a market source said.

Bank of America Corp.'s CDS costs eased 1 bp to 115 bps bid, 120 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 108 bps bid, 113 bps offered. JPMorgan Chase & Co.'s CDS costs ended 1 bp higher at 89 bps bid, 93 bps offered. Wells Fargo & Co.'s CDS costs increased 1 bp to 68 bps bid, 73 bps offered.

Merrill Lynch's CDS costs closed unchanged at 109 bps bid, 116 bps offered. Morgan Stanley's CDS costs were flat 147 bps bid, 152 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 1 bp to 135 bps bid, 140 bps offered.

Paul Deckleman contributed to this review

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