Maiden Holdings brings preferreds in tough market; supply dries up; Nokia wider, Gap flat

By Andrea Heisinger and Cristal Cody

New York, June 16 - After a handful of new deals earlier in the week, the primary side of the bond market was empty on Thursday other than an announcement for a preferred stock sale.

Continued uncertainty abroad, a drop in the stock market and the coming quarter-end were given by sources as possible reasons for companies shying away from doing deals.

Maiden Holdings North America Ltd. announced a sale of $75 million of 30-year $25-par bonds.

Fears about Greece hit the market earlier in the week and haven't subsided came on top of the fact that some companies have been issuing opportunistically ahead of maturing debt or because of low borrowing rates.

"We saw spreads widen, but [investors] are still looking," a syndicate source said.

Unfortunately, most companies aren't rushing to bring deals to the market, although there could be some effort to do so at the top of the coming week.

"There's not going to be anything tomorrow," a source said. "Maybe Monday? Who knows what will happen."

Overall trading volume fell more than 10% to about $11 billion.

"It was a very quiet day compared to the rest of the week," one trader said. "CenturyLink, Gap, Nokia and Best Buy are the biggest actives of the week, but today there's not a ton going on."

Bonds generally traded 1 bp to 2 bps weaker on light volume.

The Markit CDX Series 15 North American investment-grade index eased 1 bp to a spread of 101 bps, according to Markit Group Ltd.

Gap Inc.'s 10-year notes (Baa3/BB+/BBB-), which widened 8 bps the previous day, closed on Thursday "down an eighth from where they were yesterday," a trader said.

Nokia Corp. bonds widened 8 bps on the bid side in trading.

CenturyLink Inc.'s 10-year notes moved out again in trading, while the long bonds firmed, a trader said. "They definitely weren't as active as they have been in the past few trading sessions."

Treasuries ended the day on moderate gains as Greek fears kept prices firm and yields under pressure. The benchmark 10-year Treasury note fell 5 bps to 2.92%. The 30-year bond yield closed down 3 bps at 4.17%.

Maiden preps preferreds

Maiden Holdings North America announced plans to sell $25-par 30-year senior unsecured bonds.

The company is expected to issue $75 million of the notes (BBB-), which will be guaranteed by Maiden Holdings Ltd.

Price talk is in the 8.25% area, according to a trader.

The deal had not priced by the market's close and one trader was astonished the deal was coming at all.

"I don't know why they brought it," he said. "It's [an unfavorable] market. Nobody was bidding it. It's very, very bad."

Another trader said the issue was trading around $24.75 in the gray market.

"The market looks pretty weak overall," he said.

Bank of America Merrill Lynch is the bookrunner.

Proceeds will be used primarily to repurchase all or a portion of the outstanding trust preferred securities originally issued by Maiden Capital Financing Trust, a trust established by Maiden NA, according to a prospectus filed with the Securities and Exchange Commission.

Maiden Holdings is a Hamilton, Bermuda-based reinsurance company.

Gap unchanged

In the secondary market, Gap's 5.95% notes due 2021 ended down an eighth at 96.25, a trader said.

The clothing retailer is based in San Francisco.

CenturyLink firmer

CenturyLink's 6.45% 10-year senior notes (Baa3/BB/BBB-) widened in secondary trading on Thursday to 358 bps bid, 353 bps offered, a trader said.

The previous day the notes had narrowed in trading to 352 bps over Treasuries. CenturyLink sold the notes at a spread of 350 bps over Treasuries on June 9.

The company 7.6% bonds due 2039, priced in the June 9 reopening at a spread of Treasuries plus 380 bps, traded tighter at 377 bps bid, 367 bps offered, the trader said.

The integrated communications company is based in Monroe, La.

Nokia wider

Nokia's 5.375% notes due 2019 closed the day wider at 303 bps bid, 298 bps offered from 295 bps bid, 290 bps offered the previous day, the trader said.

"Bunch traded plus-300 [bps] today," a trader said.

The company's stock and bonds have dropped after Fitch downgraded the company two notches to BBB- from BBB+.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

CDS higher

A trader who watches the credit default swaps market said that the cost of protecting holders of bonds issued by major banking or investment banking companies against a possible event of default rose for a second straight session on Thursday, signaling decreased investor confidence in the sector.

He saw the prices rise by anywhere from 4 basis points to 9 bps from where they had been on Wednesday. This was on top of widening out by anywhere from 4 bps to 11 bps on Wednesday. "They are really getting kicked around," he declared.

He saw the CDS costs for Bank of America 4 bps higher, at 174 bps bid, 178 bps offered, and its Merrill Lynch subsidiary 5 bps higher 177 bps bid, 181 bps offered, each on top of an 11 bps widening out on Wednesday.

He also saw the cost of protecting paper from Citigroup or Goldman Sachs & Co. each increase by 5 bps on the day, to 153 bid, 157 bps offered for Citi and 154 bps bid, 158 bps offered for Goldman. On Wednesday, Citi rose by 4 bps and Goldman by 7 bps. JP Morgan's CDS protection costs increased by 4 bps for a second straight session on Thursday to 84 bps bid, 87 bps offered.

Morgan Stanley's CDS costs and those of Capital One Financial were both 9 bps higher on Thursday, to 176 bps bid, 180 bps offered for Morgan Stanley, to 87 bps bid, 91 offered for Capital One's bank paper and to 124 bps bid, 128 bps offered for Capital One's separate finance unit's bonds. All were up by a similar amount on Wednesday.

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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