JPMorgan, Wells Fargo price on volatile Friday; coming week changes from busy to uncertain

By Andrea Heisinger and Paul Deckelman

Omaha, June 6 - On a day when the stock market was in turmoil in response to soaring oil prices and weak employment data, sources were surprised to see issues from JPMorgan Chase & Co. and Wells Fargo & Co. price.

"I was under the impression we weren't going to see anything today," a source said. "Actually, I don't think those two were widely known."

The low volume made it difficult to tell what immediate effect the negative headlines had on the bond market, he said.

"Obviously stocks got hammered today, but it's hard to tell what it did to the bonds since nothing much priced today. It was definitely not a constructive tone," he said.

Small deals only

The issues that priced Friday were not large, but tested a statement made by a source Thursday after an issue was postponed that "you could price anything in this market."

JPMorgan priced $200 million of three-year senior medium-term floaters at par to yield three-month Libor plus 75 basis points.

J.P. Morgan Securities Inc. was agent.

Wells Fargo priced an $83 million issue of 40-year medium-term floaters at par to yield three-month Libor minus 25 bps.

Agent for the putable notes is Morgan Stanley & Co., Inc.

Outlook uncertain

On Thursday, sources said there were signs that volume could pick up in the coming week, with the total for the past week at more than $12.7 billion.

This was a decrease from a total of more than $16 billion the week before.

The week was one of extremes, with several issues pricing Tuesday, but new deal activity slowing to a trickle by week's end partly, because of supply, but also because of a stream of negative news.

Ratings downgrades and liquidity concerns at Lehman Brothers rounded out a week that was also marred by bond market-unfriendly comments from Federal Reserve chairman Ben Bernanke on the economy and inflation.

Leading into Friday, sources said what happened at week's end would influence the coming week.

"It's likely to set the tone," a source said ahead of the economic data. "If it's good, we're going to see things Monday, and if not who knows. It's a busy week ahead."

As Friday's headlines unfolded with unemployment hitting 5.5%, posting the highest monthly increase since 1986, and oil prices surging, the view of the coming week shifted.

"Credit was definitely wider and equities took the brunt of the beating," a source said. "Everyone was looking at today to set the tone for the forward calendar. Here and away we were looking at a busy coming week."

What may result is a week where the "tone is choppy and volatile," he said.

The week saw a mixed bag of issuers and issues, most of which were under $1 billion.

Those at or greater than $1 billion came from Suncor Energy Inc., KfW, National Australia Bank, U.S. Bancorp and General Electric Capital Corp.

Smaller issuers included Humana Inc., Kinder Morgan Energy Partners LP and Hartford Financial Services Group, Inc.

An issue from American Financial Group, Inc. was postponed this week, market sources said, although no official reason was announced by the company.

It's unclear what the forward calendar will bring for the coming week, but Friday's volatility could scare away potential issuers.

"We were looking at a bigger week than this one, but who knows," a source said.

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