Issuance set to start year-end wind-down in coming week; new AT&T notes tighten in secondary

By Andrea Heisinger and Aleesia Forni

New York, Dec. 7 - There were no new investment-grade bond sales on Friday as unemployment numbers for November were released and talks about the upcoming fiscal cliff remained contentious.

The empty primary capped a week of nearly $25 billion of new corporate bond sales, which was better than the $15 billion to $20 billion expected.

Syndicate desks are talking between $10 billion and $15 billion in the pipeline for the coming week as issuers try to get bonds priced ahead of the end of the year. There aren't any huge sales expected, like those from Intel Corp. and AT&T Inc. in the past week.

"There will be a little bit of stuff the following week, but a lot of people are looking at next week as it," a source said late Friday.

The primary is said to be "quieter" in the week ahead, with issuance front-loaded in the first three days, a syndicate source said.

"Nothing big like AT&T," the source said of the possible deals, referring to Thursday's $4 billion sale from the telecommunications company. "The rumor is there will be a couple of decent-size things - like benchmark size."

"It's time for a break," the syndicate source said. "We've been busy for five to six weeks except for Thanksgiving."

The new $200 million of 4.9% $25-par mortgage bonds due 2052 from Entergy Arkansas Inc. was a hot commodity and had freed to trade at midmorning in the New York session, a trader said.

"It's hard to find right now," he added. "It's bid up. We've seen it at $25.08, a lot of par trades, and I would say the average is $25.05."

Ahead of the close, trading was seen mostly at par, with some bids of $24.98, a trader said.

The Markit CDX Series 18 North American Investment Grade index was 1 bp tighter at a spread of 97 bps on Friday.

In the investment-grade secondary market, a trader quoted the three-tranche deal from AT&T 1 bp to 7 bps tighter during the session.

The company's existing bonds due 2019 were seen 1 bp weaker at the end of the day's trading.

Citi gives preferred terms

Citigroup Inc. gave terms of its $750 million of 5.9% series B fixed-to-floating rate noncumulative preferred stock priced at par after the market's close on Thursday, a trader said on Friday.

The size was increased from a minimum of $500 million and sold in line with talk in the 5.9% area, the trader said.

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 semiannual basis through February 2023. After that, the dividends will be paid at Libor plus 423 bps on a quarterly basis.

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

Citigroup Global Markets Inc. was the structuring manager and bookrunner.

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.

New AT&T bonds firm

A trader quoted AT&T's $1 billion of 0.8% three-year notes at 49 basis points bid, 43 bps offered.

The notes were sold at a spread of Treasuries plus 50 bps on Thursday.

The $1.5 billion tranche of 1.4% five-year notes was trading at 77 bps bid, 73 bps offered early Friday after pricing at 80 bps over Treasuries.

The trader saw the $1.5 billion tranche of 2.625% 10-year notes at 98 bps bid, 94 bps offered.

AT&T sold the notes with a spread of Treasuries plus 105 bps.

Meanwhile, AT&T's bonds due 2019 widened 1 bp on Friday, closing the session at 15 bps bid.

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

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