Unitrin sells bonds; coming week seen slow; secondary weaker; EOG debt firms; ACE notes flat

By Andrea Heisinger and Cristal Cody

New York, Nov. 19 - Unitrin, Inc. sold bonds in the high-grade primary on Friday, sources said, and that closed out a week of steady issuance.

The insurance and banking holding company priced $250 million of five-year notes.

The tone of the primary was unchanged from the previous day, a source said after the market close.

"There wasn't much going on," he said. "No economic data - no numbers at all really. It was quiet out there."

The Unitrin deal was the only one in the high-grade space, he said, even with emerging markets included.

The coming week may be busy for the first couple of days, but then issuance is expected to drop off and be nonexistent.

"I haven't really heard of anything away," a market source said. "There will probably be a deal or two on Monday or Tuesday. Wednesday I'm sure everyone will leave early and there won't be anything."

The market is open Friday, but as the market source said, "There's no point. There will probably be a couple of guys working every desk, and they'll leave at 1."

No activity in the secondary market was seen in the day's lone new offering, one source said.

"In secondary there was a bit of weakness today," a trader said. "It definitely felt like there were more sellers out there, but it was light volume seeing as it's Friday."

Overall investment-grade Trace volume slid 22% to less than $9 billion, according to a source.

Debt that oil and gas company EOG Resources, Inc. sold on Thursday firmed in the secondary market, while the oil and gas sector overall was unchanged, sources said.

"Metals and mining was 3 to 5 [basis points] wider," a trader said.

Elsewhere, Lowe's Cos., Inc.'s new notes priced this week firmed in secondary trading, while the home improvement retailer's long bonds sold earlier in the year widened, a source said.

ACE INA Holdings Inc.'s five-year senior notes were flat to wider in secondary trading, sources said.

"Not much flow later in the day," a trader said. "Low volume."

The Markit CDX Series 14 North American investment-grade index narrowed 1 bp on Friday to a spread of 90 bps, according to Markit Group Ltd.

Treasuries turned positive late Friday on positioning ahead of the government's auctions in the upcoming week.

The 10-year benchmark Treasury note yield fell 2 bps to 2.87%. The yield on the 30-year bond fell 4 bps to 4.24%.

Unitrin's five-year

Unitrin, Inc. priced $250 million of 6% five-year senior notes in the afternoon to yield 6%, a source close to the trade said.

The notes (Baa3/BBB-) priced at a spread of Treasuries plus 448.8 bps. Price talk on the sale was much tighter than where it priced. A source said guidance on Thursday when the sale was being marketed was in the 425 bps area.

"They're an infrequent issuer, not a household name, so it took a while to get investors comfortable," the source said.

The books were about 1.5 times oversubscribed.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds are going to repay $140 million under a credit facility, to make a $60 million capital contribution to subsidiary United Insurance Co. of America, for working capital and other general corporate purposes.

The holding company for insurance and banking subsidiaries is based in Chicago.

EOG firms

EOG Resources' senior notes (A3/A-) sold on Thursday firmed in the secondary market, traders said Friday.

"Two to three basis points better on both of them," one trader said.

EOG Resources priced $1.5 billion of senior notes in three parts on Thursday, including three-year floating-rate notes priced at par to yield Libor plus 75 bps.

A $400 million tranche of 2.5% notes due 2016 priced at a spread of Treasuries plus 105 bps.

EOG's notes due 2016 traded Friday afternoon at 103 bps bid, 98 bps offered, a source said. The notes opened the day firmer at 101 bps bid, 100 bps offered, a source said.

Near the market close, another trader saw the notes 1 bp tighter on the bid side at 102 bps bid, 98 bps offered.

The second tranche of $750 million of 4.1% notes due 2021 priced at 125 bps over Treasuries.

The notes due 2020 firmed a point off the morning to 124 bps bid, 119 bps offered and continued to tighten over the afternoon to 122 bps bid, 121 bps offered, traders said.

The oil and natural gas company is based in Houston.

Lowe's older debt widens

Lowe's priced $1 billion of senior notes (A1/A/A) in two parts on Wednesday, which firmed in light trading, while the company's debt sold earlier this year widened on Friday, a trader said.

Lowe's on Wednesday sold $475 million of 2.125% notes due 2016 at a spread of Treasuries plus 68 bps.

In Friday's secondary market, the notes due 2016 tightened to 65 bps bid, 61 bps offered. As the market wound to a close, another trader saw the notes a point tighter on the bid side.

Lowe's also sold $525 million of 3.75% notes due 2021 at a spread of 88 bps over Treasuries. Early in the day, a trader quoted the notes at 84 bps bid, 81 bps offered.

The tranche firmed to 83 bps bid, 80 bps offered in trading. Ending the day, one trader quoted the notes slightly weaker at 84 bps bid, 82 bps offered.

Also in the secondary market, Lowe's existing 5.8% bonds due 2040, which priced on April 12 at a spread of 110 bps over Treasuries, were quoted wider at 118 bps bid, 113 bps offered, a trader said.

The home improvement retailer is based in Mooresville, N.C.

ACE INA weakens on bid side

ACE INA's $700 million of 5.875% five-year senior notes (A3/A-) priced to yield Treasuries plus 108 bps on Thursday and widened on the bid side in the secondary market, traders said.

The notes were quoted at 113 bps bid, 108 bps offered.

Zurich-based ACE INA, a subsidiary of ACE Group Holdings, Inc., operates as an insurance and reinsurance company in the United States and internationally.

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