Vepco, Webster Financial price as market tone improves; new paper tightens in aftermarket

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 4 - Virginia Electric & Power Co., Germany's Erste Abwicklungsanstalt and Webster Financial Corp. were among the issuers to price in Tuesday's high-grade primary market.

"It was better than yesterday," one market source said of the day's tone, adding that it was a "solid session" for the investment-grade market.

Vepco sold a $750 million issue of senior notes in two parts during the session.

A $350 million tranche of 3.45% notes due 2024 priced at Treasuries plus 85 basis points.

There was also $400 million of 4.45% notes due 2044 priced at 90 bps over Treasuries.

Both tranches were priced at the tight end of talk, a source said, and the deal's orderbook was more than two times oversubscribed.

Meanwhile, Germany's Erste Abwicklungsanstalt sold $500 million of two-year floating-rate notes on Tuesday at par to yield Libor plus 12 bps.

Webster Financial came to market with $150 million of 4.375% senior notes due 2024.

The company priced the issue on Tuesday with a spread of 185 bps over Treasuries.

American Realty Capital Properties Inc. was also in Tuesday's market with senior notes with maturities in 2017, 2019 and 2024 in a private offering via Rule 144A and Regulation S, though details were not available at press time.

American Realty Capital's three tranches performed stronger in aftermarket trading late afternoon, a trader said.

American Realty Capital's notes due 2017 firmed to 131 bps offered, while the tranche of notes due 2019 traded better at 155 bps offered, the trader said. The company's notes due 2024 headed out firmer at 196 bps offered.

Virginia Electric and Power's 3.45% notes due 2024 firmed 2 bps in the secondary market, a trader said. Virginia Electric and Power's 4.45% notes due 2044 were not immediately active in trading.

Bonds headed out stronger on the day overall, according to market sources.

The Markit CDX North American Investment Grade series 21 index firmed 1 bp to a spread of 73 bps on Tuesday.

Vepco prices tight

Virginia Electric & Power came to Tuesday's market to price $750 million of senior notes (A2/A-/A-) in two tranches, according to a syndicate source and an FWP filed with the Securities and Exchange Commission.

The sale included $350 million of 3.45% 10-year notes sold with a spread of Treasuries plus 85 bps, or 99.798, to yield 3.474%.

A second tranche was $400 million of 4.45% notes due 2044 priced at 90 bps over Treasuries.

Pricing was at 99.212 to yield 4.498%.

In the secondary market, Virginia Electric and Power's 3.45% notes due 2024 traded better at 83 bps bid, 80 bps offered, a trader said.

The tranche of 4.45% notes due 2044 was not seen in late day trading.

BNP Paribas Securities Corp., UBS Investment Bank and Deutsche Bank Securities Inc. were the joint bookrunners.

The company plans to use proceeds for general corporate purposes, including the repayment of short-term debt.

The electric utility is based in Richmond, Va.

Erste Abwicklungsanstalt floaters

Germany's Erste Abwicklungsanstalt priced a $500 million issue of floating-rate notes due Feb. 11, 2016 on Tuesday with a coupon of Libor plus 12 bps at par, a market source said.

Deutsche Bank Securities, Barclays, Citigroup Global Markets Inc. and Goldman Sachs & Co. were the joint bookrunners.

The public law agency is charged with winding up portfolios transferred to it and is based in Dusseldorf.

Webster new issue

Webster Financial priced a $150 million issue of 4.375% senior notes due 2024 on Tuesday with a spread of 185 bps over Treasuries, according to a market source and an FWP filed with the SEC.

The notes (Baa1/BBB-/) priced at 99.208 to yield 4.474%.

Joint bookrunners were Deutsche Bank Securities, Jefferies & Co. and Sandler O'Neill + Partners, LP.

Proceeds will be used for general corporate purposes, which may include refinancing, reduction or repayment of debt, investments in Webster Bank, NA and other subsidiaries as regulatory capital, financing of possible acquisitions, repurchases of stock, expansion of the business and investments at the holding company level.

Webster Financial is a Waterbury, Conn.-based bank holding company.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices fell, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 90 bps bid, 94 bps offered. Citigroup Inc.'s CDS costs tightened 4 bps to 94 bps bid, 98 bps offered. JPMorgan Chase & Co.'s CDS costs fell 3 bps to 73 bps bid, 77 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 44 bps bid, 48 bps offered.

Merrill Lynch's CDS costs fell 1 bp to 92 bps bid, 97 bps offered. Morgan Stanley's CDS costs tightened 4 bps to 101 bps bid, 105 bps offered. Goldman Sachs Group, Inc.'s CDS firmed 1 bp to 107 bps bid, 111 bps offered.

Paul Deckelman contributed to this review.

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