KfW, Commonwealth Bank of Australia fill in for corporate names; Ford, Comcast notes active

By Aleesia Forni and Andrea Heisinger

New York, Jan. 9 - Sovereign sales took over for corporates in dominating the high-grade bond market on Wednesday as KfW and the Commonwealth Bank of Australia each sold bonds.

KfW sold $4 billion of 10-year global notes backed by the Republic of Germany.

The Commonwealth Bank of Australia was in the market with a $2 billion offering of three-year covered bonds being priced privately.

A market source also said that Norway's Kommunalbanken had priced $2 billion of five-year notes, but terms were not available at press time.

The preferred stock market remained active as Duke Energy Corp. priced $500 million of $25-par notes due 2073.

The lack of corporate issuers in the market wasn't a concern for some in the market, after a glut pricing on Monday.

"People were waiting for some earnings today, like Alcoa," a source said. "Those went well, so maybe people will jump in [Thursday]."

The week had been expected to be heavy on sovereign and FIG issuers trying to get in while market conditions were still optimal. Many corporate names pre-funded at the end of 2012 ahead of an outcome in fiscal cliff talks.

The secondary market saw Tuesday's issuances from Comcast Corp. and Ford Motor Credit Co. LLC among the day's most actively traded deals, according to a market source.

Comcast's $2.95 billion three-part offering was wider across the board in trading on Wednesday, while Ford Motor Credit's 10-year notes firmed 5 basis points.

CBA does covered bonds

Commonwealth Bank of Australia priced $2 billion of 0.75% three-year covered bonds (Aaa//AAA) via Rule 144A and Regulation S, a market source said.

Pricing was at a spread of mid-swaps plus 32 bps, or Treasuries plus 44.4 bps.

Bookrunners were Barclays, Commonwealth Bank of Australia and RBC Capital Markets LLC.

The Sydney-based banking and financial services company was last in the U.S. bond market with a $3.25 billion sale of notes in three tranches on Sept. 11, 2012.

KfW sells $4 billion

Germany's KfW was in the market with a $4 billion sale of 2.125% 10-year global notes (Aaa/AAA/AAA) priced at 99.731, according to an FWP with the Securities and Exchange Commission.

The sale is guaranteed by the Federal Republic of Germany.

Bookrunners were BNP Paribas Securities Corp., Goldman Sachs International and J.P. Morgan Securities LLC.

The government-owned development bank is based in Frankfurt.

Duke Energy's $25-pars

Duke Energy priced $500 million of 5.125% $25-par junior subordinated debentures (Baa3/BBB-/BBB-) due Jan. 15, 2073, according to an FWP filing with the Securities and Exchange Commission.

Price talk was originally 5.25% to 5.375%, according to a trader. It was then revised to around 5.125% with the notes pricing in line with that level.

"It's going pretty well," a trader said at midday. "There have been strong bids the entire time, even with the revised price talk."

He said the issue was trading in a range of $24.95 to par in the midday gray market. The shares were trading at $25.30 bid after the market close.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Duke Energy intends to list the notes on the New York Stock Exchange under the ticker symbol "DUKH."

Proceeds will be used to fund the redemption of $300 million of 7.1% junior subordinated deferrable interest notes due 2039, which were issued by a subsidiary, Florida Progress Funding Corp. Any remaining funds will be used to repay commercial paper as it matures, to fund capital expenditures of unregulated businesses and for general corporate purposes.

The diversified energy company is based in Charlotte, N.C.

Ford trades better

Ford Motor Credit's $1.25 billion of 2.375% five-year notes was quoted 5 bps better on Wednesday, a market source said.

The notes were trading at 163 bps bid, 162 bps offered during the session.

The Dearborn, Mich-based financing arm of automaker Ford Motor Co. sold the notes to yield Treasuries plus 168 basis points on Tuesday, a market source said.

Comcast weakens

A trader quoted Comcast's $750 million tranche of 2.85% 10-year notes 4 basis points wider at 104 bps bid, 99 bps offered.

The notes priced at a spread of Treasuries plus 100 bps on Tuesday.

The $1.7 billion of 4.25% 20-year notes was also 4 bps weaker at 129 bps bid, 127 bps offered following Tuesday's sale at a spread of 125 bps over Treasuries.

Meanwhile, the $500 million tranche of 4.5% 30-year bonds was 1 bp wider at 146 bps bid, 144 bpd offered.

The bonds were sold at Treasuries plus 145 bps.

The telecommunications company is based in Philadelphia.

Stephanie N. Rotondo contributed to this review

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