Bunge, Florida Gas, Canadian sovereigns sell as issuance slows; Florida Gas up in trading

By Aleesia Forni and Andrea Heisinger

New York, June 12 - Volume dropped in the high-grade primary on Tuesday as Bunge Limited Finance Corp. and Florida Gas Transmission Co. LLC each priced smaller offerings.

This is in contrast to the nearly $7 billion of bonds priced in the market on Monday as issuers rushed to take advantage of a window that had opened after Spain asked for a bailout from the euro zone.

Bunge Ltd. Finance sold $600 million of five-year senior notes guaranteed by parent company Bunge Ltd. The deal size was increased from $400 million due to demand.

Natural gas pipeline company Florida Gas Transmission sold $300 million of 10-year senior notes.

The new notes tightened in the secondary, a market source said near Tuesday's close.

Canada had a couple of U.S. dollar-denominated offerings including a $1 billion sale of five-year notes from Hydro-Quebec.

Export Development Canada priced its $1 billion sale of three-year notes after it went overnight from Monday.

Another sovereign deal came from Council of Europe Development Bank which priced $1 billion of five-year senior notes.

There was a $1.25 billion offering of five-year covered bonds sold via Rule 144A and Regulation S from National Bank of Australia Ltd.

In the preferred sector, there was a $325 million sale of 60-year $25-par subordinated notes from NextEra Energy Capital Holdings Inc. that had also gone overnight from Monday.

Borrowings costs rose in Spain on Tuesday, which may have raised worries that accounted for the downturn in new high-grade deals. In addition, market participants said the week's corporate deals are mostly exhausted.

"The market was actually up all day," a syndicate source said of the tone in investment grade. "It was fine."

There's "not much" expected for new deals on Wednesday or the remainder of the week, the source added.

A market source agreed, commenting that the week "seemed front-loaded" from the beginning.

Investment-grade bank and brokerage credit default swaps costs were mixed on Tuesday, according to a market source.

Bank of America's CDS costs firmed 1 bps to 292 bps bid, 297 bps offered. Citi's CDS costs widened 2 bps to 265 bps bid, 270 bps offered.

Merrill Lynch's CDS costs were 3 bps wider at 312 bps bid, 322 bps offered. Morgan Stanley's CDS costs were unchanged at 413 bps bid, 418 bps offered. Goldman Sachs' CDS costs were also unchanged at 315 bps bid, 320 bps offered.

Bunge upsizes to $600 million

Bunge Ltd. Finance sold an upsized $600 million of 3.2% five-year senior notes (Baa2/BBB-/BBB) to yield Treasuries plus 250 basis points, a source close to the trade said.

The size of the trade was increased from $400 million, the source said. The notes were priced tighter than guidance in the 262.5 bps area.

There was about $1.2 billion in demand for the bonds.

"There was good demand - solid book," the source said as the reason the sale was upsized by $200 million.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were active bookrunners.

Proceeds are being used for general corporate purposes, including repayment of parent company Bunge Ltd.'s outstanding debt.

The deal is guaranteed by Bunge.

The White Plains, N.Y.-based agribusiness and food company was last in the market with a $500 million sale of 4.1% offering of five-year notes priced at 190 bps over Treasuries on March 8, 2011.

Florida Gas prices, tightens

Florida Gas Transmission sold $300 million of 3.875% 10-year senior bonds (Baa2/BBB/) at a spread of Treasuries plus 225 bps, a market source said.

The deal was done under Rule 144A and Regulation S.

RBS Securities Inc. and UBS Securities LLC were bookrunners.

The notes were seen 2 bps tighter at the end of New York's session, sitting at 223 bps bid, 218 bps offered, a market source said.

Proceeds are being used to refinance the company's 7% senior notes due in July, to replace outstanding borrowings on a revolving credit facility and for general corporate purposes.

The Houston-based natural gas pipeline was last in the market with a $850 million sale of notes in two maturities on July 8, 2010. A 5.45% 10-year note from that deal priced at 245 bps over Treasuries.

NAB's covered bonds

National Australia Bank sold $1.25 billion of 2% five-year covered bonds (Aaa/AAA/) at a spread of Treasuries plus 129.5 bps, a source away from the trade said.

The deal was brought to market under Rule 144A and Regulation S.

Barclays Capital Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., National Australia Bank and RBC Capital Markets LLC were bookrunners.

The bank and financial services company is based in Melbourne.

NextEra prices $25-pars

NextEra Energy Capital Holdings priced a $325 million sale of 5.625% $25-par series H junior subordinated debentures due June 15, 2072, according to an FWP filed with the Securities and Exchange Commission.

Pricing was in line with talk.

There is a $25 million overallotment option. The public offering price was $25 per share (Baa2/BBB/BBB).

Ahead of pricing - which occurred shortly before the bell - the paper was trading at $24.65 in the midday gray market.

After pricing and post-close, a market source said that "last I heard, it wasn't doing so well in the gray."

He quoted the notes at $24.67 bid, $24.77 offered.

NextEra Energy Inc. will guarantee the notes.

The company is applying to list the notes on the New York Stock Exchange.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds from the offering will be contributed to NextEra's general funds. The company will then use the funds to repay a portion of its commercial paper obligations and for other general corporate purposes.

NextEra is a Juno Beach, Fla.-based energy provider.

Hydro-Quebec's five-year

Hydro-Quebec (Aa2/A+/) priced a $1 billion U.S.-dollar denominated benchmark offering of 1.375% five-year global notes at mid-swaps plus 35 bps or Treasuries plus 64.65 bps, a bond source said.

The notes were sold in line with talk at mid-swaps plus low to mid 30 bps.

Bank of America Merrill Lynch, CIBC World Markets Inc., HSBC Securities and RBC Capital Markets LLC were joint lead managers.

Proceeds will be used for general corporate purposes.

Hydro-Quebec is a Quebec government-owned electric power generator and distributor.

Council of Europe's $1 billion

The Council of Europe Development Bank priced $1 billion of 1.5% five-year senior notes (Aaa/AAA/AAA) to yield mid-swaps plus 55 bps, according to an FWP filing with the SEC.

Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc. and RBC Capital Markets LLC were lead managers.

The financing and development institution for social projects in Europe is based in Paris.

EDC's short bonds

Export Development Canada sold $1 billion of 0.5% three-year notes (Aaa/AAA/AAA) at a spread of mid-swaps minus 18 bps, a source away from the trade said.

The deal had been announced on Monday.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and TD Securities (USA) LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The government-backed agency for exporters is based in Ottawa.

AT&T tightens

In the high-grade corporate secondary market, AT&T Inc.'s bonds due 2019 tightened 3 bps on Tuesday, closing the session at 76 bps bid.

The Dallas-based phone and internet services provider priced $2.25 billion of the 5.8% notes in January 2009 at 300 bps over Treasuries.

Bank of Montreal 1 bps wider

Also in the secondary, the 1.3% notes from Bank of Montreal due 2014 widened 1 bps to 53 bps bid, according to a market source.

The bank priced $2 billion of notes in October at mid-swaps plus 50 bps.

Merrill Lynch widens

The secondary also saw Merrill Lynch's 6.875% notes due 2018 widen 23 bps to 435 bps bid near the end of New York's session.

On April 22, 2008, the bank priced $5.5 billion of 10-year notes at 320 bps over Treasuries.

Cristal Cody and Stephanie N. Rotondo contributed to this review

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