AT&T, Citi, Cliffs Natural Resources hit market; Intel bonds see activity in subdued secondary

By Aleesia Forni and Andrea Heisinger

New York, Dec. 6 - There was one large trade from AT&T Inc. in the investment-grade bond market on Thursday, accompanied by some smaller, lesser-rated offerings as the pace slowed.

The day's pipeline marked a slowing of the frantic pace of the first part of the week.

AT&T sold $4 billion of bonds in maturities of three, five and 10 years.

Joining the telecommunications company in Thursday's primary were Cliffs Natural Resources Inc. and a joint sale from Ventas Realty, LP and Ventas Capital Corp.

Cliffs sold $350 million of five-year notes.

Ventas tapped the market for an upsized $925 million two-part sale that includes a new note due 2018 and a reopening of 3.25% paper due in August 2022. The size was increased from $750 million on sizable demand, a source said.

Citigroup Inc. accessed the preferred stock market with a sale of fixed-to-floating shares.

Citi was joined by Entergy Arkansas Inc., which sold $200 million of $25-par bonds due 2052 after the size of the offering was doubled.

High-grade bonds continued to see heavy demand despite excessive tightening throughout the pricing process.

"It's crazy when you have these BBB names coming down that much," a source said. "They're all industrials though - no financials."

Sales in the market are set to "wind down tomorrow" although the coming week could be another busy one as issuers aim to get in while rates are still rock bottom, and before the end of the year fiscal cliff deadline.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 98 bps on Thursday.

AT&T's new 10-year notes were seen at 98 bps bid in the gray market, while its existing 5.8% notes from AT&T due 2014 were trading 1 bp tighter late Thursday.

Bank of America's 7.375% notes due 2014 were among the day's most actively traded deals, closing the session 5 bps better.

Tuesday's new issue from Intel Corp. was also active for the second consecutive session. The tranche due 2042 was quoted 5 bps tighter.

In other recent deals, both fixed-rate note tranches from General Electric Capital Corp. were 5 basis points better on the day, and Humana Inc.'s notes were unchanged during the session.

Meanwhile, Starwood Hotels & Resorts Worldwide Inc.'s 3.125% 10-year notes, which hit the market on Wednesday, tightened 3 bps.

Investment-grade bank and brokerage credit default swaps costs were mostly unchanged to higher on Thursday.

Bank of America's CDS costs were unchanged at 137 bps bid, 142 bps offered. Citi's CDS costs were also unchanged at 129 bps bid, 134 bps offered. J.P. Morgan's CDS costs rose 1 bp to 91 bps bid, 96 bps offered. Wells Fargo's CDS costs were also 1 bps wider at 79 bps bid, 84 bps offered.

Merrill Lynch's CDS costs were 2 bps wider at 134 bps bid, 144 bps offered. Morgan Stanley's CDS costs declined 2 bps to 197 bps bid, 203 bps offered. Goldman Sachs' CDS costs were 2 bps wider at 159 bps bid, 164 bps offered.

Ventas prices $925 million

Ventas Realty and Ventas Capital priced an upsized $925 million of senior notes (Baa3/BBB-/BBB) in new and reopened tranches, an informed source said.

The size of the offering was increased from $750 million.

A source said that the new five-year notes saw about $2.2 billion in demand while the reopened tranche was less oversubscribed with about $550 million in investor interest.

The sale included $700 million of 2% notes due 2018, pricing at a spread of Treasuries plus 145 bps. The tranche came in tighter than talk in the 160 bps area.

There was a reopening of 3.25% bonds due Aug. 15, 2022 to add $225 million. Pricing was at Treasuries plus 185 bps. These notes priced at the tight end of talk in the 187.5 bps area.

Total issuance of the notes due 2022 is $500 million including $275 million priced at 188 bps over Treasuries on July 31.

The offering is guaranteed by Ventas, Inc.

Bookrunners were Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

Proceeds are being used to repay debt under an unsecured revolving credit facility, working capital and other general corporate purposes, including to fund future acquisitions or investments, if any.

The real estate investment trust for housing and health care properties is based in Chicago.

AT&T's $4 billion trade

AT&T was in the market with a $4 billion sale of notes (A2/A/) in three tranches, an informed source said.

The sale included $1 billion of 0.8% three-year notes sold at a spread of Treasuries plus 50 bps. Pricing was much tighter than initial talk in the 62.5 bps area.

There was $1.5 billion tranche of 1.4% five-year notes priced at 80 bps over Treasuries. Pricing was tight to talk in the 87.5 bps area.

A $1.5 billion tranche of 2.625% 10-year bonds sold with a spread of Treasuries plus 105 bps. The spread was at the tight end of guidance in the 110 bps area.

Bank of America Merrill Lynch and Goldman Sachs & Co. were bookrunners.

AT&T last sold bonds in the U.S. market in a $2 billion sale in two tranches on June 11.That offering included 1.7% five-year notes priced at 105 bps over Treasuries and a reopened 3% 10-year notes sold at 135 bps over Treasuries.

The telecommunications company is based in Dallas.

Cliffs upsizes

Cliffs Natural Resources was in the market with an upsized $500 million sale of 3.95% five-year senior notes (Baa3/BBB-/) priced at Treasuries plus 355 bps, an informed source said.

The size of the trade was increased from $350 million, the source said.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being used to repay senior notes due 2013 and 2015. Any remainder will be used for general corporate purposes including repayment of a term loan facility and a revolving credit facility.

Cliffs Natural last sold bonds in a $1 billion sale in two tranches on March 16, 2011.

The international mining and natural resources company is based in Cleveland.

Citi's preferreds

Citigroup has issued series B fixed-to-floating rate noncumulative preferred stock, an informed source said late in the day.

Price talk was in the 5.9% area.

Terms of the sale were not available at press time.

The preferreds will be issued as depositary shares representing a 1/25th interest.

When declared by the board of directors, dividends will be paid at a fixed rate on a semi-annual basis through February 2023. After that, the dividends will be paid at Libor plus a spread on a quarterly basis.

Citigroup does not intend to list the preferreds on any exchange.

Citigroup Global Markets Inc. is the structuring manager and bookrunning manager.

Proceeds will be used for general corporate purposes, which may include funding subsidiaries, financing acquisitions or expansions and the refinancing of debt.

Citigroup is a New York-based diversified financial services company.

Entergy does $25-par

Entergy Arkansas priced an upsized $200 million of 4.9% $25-par first mortgage bonds due Dec. 1, 2052, according to a trader.

Price talk was 5% to 5.125%. The size of the offering was increased from $100 million.

The issue was seen trading at a bid of $24.95, with an offer at par, a trader said.

Bookrunners were Wells Fargo Securities LLC, Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Stephens Inc.

Proceeds will be used to repay borrowings from the Entergy system money pool, to repay borrowings under a $20 million credit facility with First National Bank that matures April 30, 2013 and a $150 million credit facility with Citibank NA.

Entergy Arkansas is a Little Rock, Ark.-based power producer.

AT&T tightens

In the secondary market, AT&T bonds due Feb. 15, 2019 tightened 1 bp on Thursday, closing the session at 14 bps bid.

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

Bank of America tightens

In other trading, Bank of America's 7.375% notes due 2014 firmed 5 bps to 106 bps bid during the session.

The bank priced $3 billion notes due 2014 at Treasuries plus 537.5 bps on May 8, 2009.

Intel notes firm

Intel's $750 million tranche of 4.25% 30-year bonds were trading "around 145" bps bid during Thursday's session.

The notes were seen at 148 bps bid, 141 bps offered on Thursday after pricing with a spread of Treasuries plus 150 bps on Tuesday.

The semiconductor chip maker is based in Santa Clara, Calif.

GE Capital firms

General Electric Capital's $1 billion tranche of 1% three-year fixed-rate notes was quoted 5 bps tighter at 67 bps bid, 62 bps offered, a trader said.

The notes were sold with a spread of Treasuries plus 72 bps on Wednesday.

The $300 million of 2.1% seven-year notes also tightened 5 bps to 105 bps bid, 100 bps offered after pricing with a spread of 110 bps over Treasuries, the trader added.

General Electric Capital is a Norwalk, Conn.-based funding unit of General Electric Co.

Humana notes flat

In other secondary action, the two-part deal from Humana was unchanged, the trader said.

The $600 million tranche of 3.15% 10-year notes was seen trading at 160 bps bid, 157 bps offered.

The notes priced with a spread of Treasuries plus 160 bps on Wednesday.

The company also sold $400 million of 4.625% 30-year bonds with a spread of 185 bps over Treasuries, and those notes were quoted at 185 bps bid, 182 bps offered.

Humana is a Louisville, Ky.-based health care and insurance company.

Starwood trades better

Starwood Hotels & Resorts' $350 million of 3.125% 10-year senior notes firmed 3 bps to 155 bps bid during the session.

The Stamford, Conn-based hotel and leisure company came to market Wednesday to sell the notes with a spread of Treasuries plus 158 bps.

Stephanie N. Rotondo contributed to this review

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