Dr Pepper Snapple, BNP Paribas, Aflac among new deals; Citi, XTO bonds react to headlines

By Andrea Heisinger

New York, Dec. 14 - Dr Pepper Snapple Group Inc., BNP Paribas, Duke Energy Ohio, Inc. and Aflac Inc. all sold bonds on a Monday where headlines overshadowed the new deals.

JPMorgan Chase Capital XXVIII announced a sale of 30-year hybrid capital securities that are expected to price on Tuesday, a source said.

News about Citigroup Inc. formulating a plan to repay the remaining $20 billion in Troubled Asset Relief Program funds made waves with its bonds in the morning.

Meanwhile, news that Exxon Mobil Corp. would buy XTO Energy Inc. in an all-stock transaction worth $41 billion lifted XTO's bonds.

In the primary market, Dr Pepper Snapple Group sold $850 million in two tranches of two-year and three-year notes that priced tighter than guidance.

BNP Paribas priced $1 billion of three-year notes that were not seen trading.

Aflac priced an upsized $400 million in 30-year bonds. The size was increased by $50 million, and the deal priced at the tightest end of talk.

The smallest sale of the day came from Duke Energy Ohio, which sold $250 million in notes due 2013.

It was a light day of trading on the secondary side of the market, traders said.

All of the new deals were quoted as at least slightly tighter. Dr Pepper Snapple and Aflac each saw their notes tighten by 10 basis points of more.

Spreads were mixed by late in the day as Treasury yields made a variety of moves. The 10-year note was unchanged from the previous day at 3.55%. The five-year note was out by 4 bps to yield 2.29%, and the 30-year bond was tighter by 1 bp to yield 4.49%.

Dr Pepper Snapple sells two tranches

Dr Pepper Snapple Group priced $850 million of senior notes in two tranches early in the day in a deal guaranteed by the beverage company's subsidiaries.

The $400 million of 1.7% two-year notes priced at a spread of Treasuries plus 90 bps.

A $450 million tranche of 2.35% three-year notes priced at 103 bps over Treasuries.

Both tranches came at the tight end of price talk. Guidance was 95 bps for the two-year notes, and the three-year tranche was talked at 110 bps over Treasuries.

Morgan Stanley & Co. and UBS Investment Bank were tapped as bookrunners.

Proceeds will be used to pay down debt under a senior unsecured term loan A facility.

The non-alcoholic beverage maker is based in Plano, Texas.

Aflac ups 30-year sale

Aflac Inc. priced an upsized $400 million of 6.9% 30-year senior notes at Treasuries plus 250 bps, with the size increased from $350 million.

The deal came at the tightest end of guidance of the 262.5 bps area, with a margin of plus or minus 12.5 bps.

Goldman Sachs & Co. and J.P. Morgan Securities ran the books.

Proceeds are being used for general corporate purposes, including repayment of parent company Aflac's 0.71% samurai notes due in July 2010.

The parent of the supplemental health and life insurance company is based in Columbus, Ga.

Supply remains in primary

Despite a fair amount of new deals in the market to start the week, there remains a "decent calendar" for the rest of the week, a syndicate source said.

There is one sale left over from JPMorgan Chase Capital, and other industrials names are set to price during the week, the source said.

"It should be busy for a couple of days, and then probably dead," he said.

Some sales may price quickly on Tuesday ahead of a two-day Federal Reserve meeting conclusion and rate announcement on Wednesday afternoon.

"I think some [companies] are thinking about the Fed, but it's not a big deal," a market source said.

Monday didn't suffer from a lack of focus, the syndicate source said, but "there wasn't a lot to focus on."

"We still have a lot of new paper out there to price," he said.

Duke Energy Ohio offers mortgage bond

Duke Energy Corp. subsidiary Duke Energy Ohio sold $250 million of 2.1% first mortgage bonds due in 2013 at Treasuries plus 78 bps, according to an FWP filing with the Securities and Exchange Commission.

Barclays Capital Inc. and RBS Securities Inc. were the bookrunners.

Proceeds are going to repay a portion of borrowings under Duke Energy's master credit facility.

The electric and gas service provider is based in Cincinnati.

BNP sells $1 billion short bonds

Paris-based financial services company BNP Paribas swiftly priced $1 billion of 2.125% three-year notes at Treasuries plus 80 bps.

BNP Paribas Securities was the bookrunner.

JPMorgan Chase unit plans hybrid

JPMorgan Chase Capital is planning a sale of 30-year fixed-to-floating-rate capital securities at $25 each, according to a 424B3 filing with the SEC and a market source.

The deal is expected to price on Tuesday.

The notes are being talked to yield between 7.25% and 7.375%, the source said.

The deal is guaranteed by JPMorgan Chase & Co.

JPMorgan is the bookrunner.

The issuing arm of the financial services company is based in New York City.

Citi bonds tighten on Fed payback

Bonds from Citigroup were tighter by late afternoon, a trader in the financial sector said, but was unimpressed as most other bonds in the investment-grade secondary had also come in.

"There was a good run-up early in the morning," he said. "Then they gave a little bit back [throughout the day]."

Bonds in the investment-grade market have been going "nowhere but up for the past few weeks," he added.

Another trader said that at the top of the day, the bank's bonds were 10 bps better across the board, but that gain fell off as the news sunk in.

XTO bonds jump on Exxon buyout

Outstanding bonds from XTO Energy responded favorably to the news that Exxon Mobil would buy the company in an all-stock transaction.

One trader said XTO bonds were 20 to 30 bps better across the board by late in the day. Another quoted the bonds as "80 basis points tighter right away" as the news came out in a morning press release. The XTO credit-default swaps came in about 60 bps immediately, the trader said.

A 5.5% bond due 2018 from XTO was quoted at between 480 bps and 477 bps bid a week ago. By late Monday it was in the "low 420 [bps]," a trader said.

Dr Pepper Snapple bonds trade in

The two tranches of bonds from Dr Pepper Snapple Group were both trading nicely tighter by late in the day, a trader said.

The new 1.7% due 2011 was sold at 90 bps over Treasuries and was quoted at 75 bps bid, 71 bps offered.

The longer 2.35% note due 2012 was quoted at both 89 bps bid and 92 bps bid. Both were better than the Treasuries plus 103 bps price.

Buyers take over secondary

For the past couple of weeks, buyers have inundated trading, while sellers have mostly sat on the sidelines. That hadn't changed on Monday, where there was "definitely a buying mentality out there," a trader said.

Many of the new deals were tightening with no end in sight on that demand.

This was despite a light day of trading volume. There was about $7.4 billion in trades for the day, which was slightly less than Friday.

"It was definitely a light day out there all over," the trader said.

Much of the focus was on not only a couple of the new issues, but also the three tranches of BlackRock bonds priced a week earlier.

Aflac deal trades improved

A new 6.9% bond due 2039 from Aflac was tighter by about 10 bps, a trader said. The bond priced at 250 bps over Treasuries and was quoted at 238 bps offered.

TIAA bond tightens

A bond sold Friday by Teachers Insurance and Annuity Association of America continued to tighten after the weekend, a trader said.

The 6.85% bond due 2039 was sold at Treasuries plus 237.5 bps. It was quoted at 215 bps bid, 211 bps offered. This was continued tightening from the 223 bps bid, 218 bps level it was quoted at on Friday.

Duke Energy Ohio note trades better

The 2.1% bond due 2013 from Duke Energy Ohio was the poorest performing of the new deals on Monday. It tightened only a few basis points after pricing at 78 bps over Treasuries. It was quoted at 75 bps bid, 71 bps offered.

BlackRock bonds top trading

Two of the three tranches of notes priced a week ago by BlackRock, Inc. topped bond trading by volume by early afternoon in the high-grade secondary, according to Trace data.

The 3.5% bond due 2014 and 5% due 2019 were topping the list, with the 10-year edging out the five-year in popularity.

The BlackRock 10-year note saw about $61 million in paper change hands by late afternoon, a trader said.

The bonds have been consistently trading well since being priced on Dec. 7.

The 2019 was quoted at a level of 126 bps, while the 2014 was quoted at 113 bps.

A 6.375% bond due 2014 from Citigroup was lower on the list, as the large bank prepares to pay back $20 billion in bailout money to the U.S. government.

Bank, broker CDS levels tighten

Both bank and broker credit-default swap costs were tighter by late in the day - likely due to the Citigroup TARP repayment news, a trader in that sector said.

Bank names were anywhere from 5 to 22 bps better. Citigroup led the way at the wide end of that spectrum, tightening by 22 bps to 130 bps bid, 140 bps offered.

Bank of America Corp.'s CDS level was 11 bps tighter, while Wells Fargo & Co. came in by 8 bps. JPMorgan Chase's CDS was tighter by 5 bps.

Brokerage CDS costs were between 8 and 11 bps improved.

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