Rentenbank prices paper amid optimistic tone; Alabama Power firms, ArcelorMittal softens

By Andrea Heisinger and Cristal Cody

New York, March 4 - Landwirtschaftliche Rentenbank was the only issuer in the high-grade market on Friday, a day otherwise focused on February U.S. employment data.

Rentenbank's sale had been announced on Thursday and went overnight. The German agribusiness development agency sold $500 million of three-year floaters in the Rule 144A market.

Another sale was done late on Thursday by Kommunalbanken Norway. The lender to municipalities sold $250 million of three-year floaters, also under Rule 144A.

There weren't any new deals expected for the day as the job report for February came out. Unemployment dropped, leaving the market with a good tone and a good outlook for the coming week.

"We should see some [deals] off the bat," a syndicate source said of Monday.

There is "a lot of momentum" from the past week and the coming one could be busy, the source said.

There was upwards of $14.65 billion of new deals for the week, according to Prospect News data. One source predicted between $15 billion and $20 billion in bonds for the March 7 week.

Trading in the secondary markets was a "typical employment Friday," a trader said.

The Labor Department said Friday that U.S. employers hired 192,000 workers in February, seen as a moderate growth rate, giving a boost to Treasuries.

Overall investment-grade Trace volume dropped nearly 30% to about $10.5 billion, according to a market source.

Alabama Power Co.'s notes closed the day tighter, an exception in the sector, a trader said.

"Utilities are all unchanged," the trader said. "Spreads are relatively unchanged and softer today."

The Markit CDX Series 14 North American investment-grade index eased 2 basis points to a spread of 84 bps, according to Markit Group Ltd.

ArcelorMittal's bonds also were a "little softer," a trader said.

The Luxembourg-based steel producer's 9.85% notes due 2019 moved out in trading on Friday to 229 bps from 214 bps on Thursday, a source said.

Treasuries rallied on the shorter end of the curve on Friday after monthly job numbers came in lower than expected and on continued Middle East unrest going into the weekend.

The 10-year benchmark note yield dropped to 3.49% from 3.55%, and the 30-year bond yield was down 2 bps at 4.6%.

Rentenbank's short bond

Germany's development agency for agribusiness, Rentenbank, priced $500 million of three-year floating-rate medium-term notes early in the day at par to yield three-month Libor plus 20 bps, a source away from the deal said.

The notes (Aaa/AAA) were sold under Rule 144A.

Bookrunners were Credit Suisse Securities and Goldman Sachs & Co.

The German development agency for agribusiness is based in Frankfurt.

Kommunalbanken gives terms

Kommunalbanken Norway sold $250 million of three-year floating-rate notes at par to yield three-month Libor plus 12 bps, a source away from the sale said.

The notes (Aaa/AAA) were priced under Rule 144A.

UBS Securities LLC was the bookrunner.

The government-funded lender to municipalities is based in Oslo.

Alabama Power firms

Alabama Power's notes firmed in the secondary market on Friday. A trader saw the bonds "going out at 87, 85."

Alabama Power priced $250 million of 5.5% 30-year series 2011A senior notes (A2/A/A+) on Thursday to yield Treasuries plus 90 bps.

The electric subsidiary of the Southern Co. is based in Birmingham, Ala.

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