GE, J.P. Morgan, HSBC bring FDIC-backed deals; FPL, Hewlett Packard deals continue to tighten

By Paul Deckelman and Sheri Kasprzak

New York, Dec. 11 -- The parade of new FDIC-backed bond deals for financial firms rolled on on Thursday, high-grade market sources said.

The biggest offering of the day was a $1.5 billion mega-deal from J.P. Morgan Chase Inc.

A sellside source said Thursday that, even though new issue activity will likely continue to fall off as the holidays approach, FDIC-backed notes are still going to get pushed through.

"Seeing more and more of them," he said. "I wouldn't be surprised to see more next week. I think volume will probably drop off tomorrow [Friday]."

General Electric Capital Corp. was heard by syndicate sources to have brought two tranches of floating-rate notes to market under the FDIC Temporary Liquidity Guarantee Program.

Another issuer was HSBC USA Inc., which brought a new issue of floaters, as well as a reopener for its $2 billion of fixed-rate three-year notes which the international banking giant had sold on Tuesday.

In the secondary market Thursday, advancing issues continued to lead decliners, by a better than four-to-three ratio. Overall market activity, reflected in dollar volumes, jumped 31% from Wednesday's pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note fell by 8 basis points to 2.60%.

Among the recently priced issues, FPL Group Capital Inc.'s new offering, and that of Hewlett Packard Co., continued to trade at strongly higher levels versus where they had priced.

Monongahela Power Co.'s new tranche of bonds were meanwhile little changed from their issue price.

JPM brings $1.5 billion

The $1.5 billion of JPMorgan notes (Aaa/AAA/AAA) priced at 100.056 with a coupon of one-month Libor plus 76 basis points, said a pricing sheet.

J.P. Morgan Securities Inc. was the bookrunner for the sale.

HSBC disclosed it priced two FDIC-backed notes on Wednesday, one a reopening, one a new deal, led by a $350 million sale of three-year, senior unsecured floating-rate notes (Aaa/AAA/AAA).

The coupon was set at one-month Libor plus 90 basis points.

HSBC (USA) Inc. was the bookrunner.

Proceeds will be used for general corporate purposes, including investment in its subsidiaries, the financing of potential acquisitions of financing companies and other uses.

HSBC prices $325 million

HSBC also said it priced another $325 million in 3.125% senior unsecured notes, which are also FDIC-guaranteed.

The three-year, non-callable notes (Aaa/AAA/AAA) priced at 100.011 to yield 3.121% or Treasuries plus 197.5 basis points.

The sole manager for the sale was HSBC Securities (USA) Inc.

HSBC sold $2 billion of the SEC-registered notes on Tuesday.

Proceeds will be used for general corporate purposes, including potential acquisitions of financial institutions.

GE prices two

In other news, General Electric Capital Corp. said it sold two notes backed by the FDIC's Temporary Liquidity Guarantee Program, both reopening priced on Tuesday.

The finance arm of industrial giant General Electric Co. sold $300 million in series G senior floating-rate notes (Aaa/AAA/) with a two-year term at 100.009. The coupon was Libor plus 63 basis points.

The bookrunners for the notes were Banc of America Securities, Barclays Capital Inc., Citigroup Global Markets, Goldman, Sachs & Co. and Morgan Stanley & Co.

The corporation also sold $250 million in series G floating-rate senior three-year notes with the coupon set at three-month Libor plus 93 bps and priced at 100.009.

The bookrunners for this sale were the same as the $300 million in floating-rate notes.

Monongahela Power bonds about unchanged

Among the recently priced issues which have moved into the secondary market, a trader saw Monongahela Power Co.'s 7.95% notes due 2013 trading at a spread over comparable Treasury issues of 638 bps bid, 633 bps offered, not much changed from the 639 bps level at which the West Virginia-based unit of Allegheny Energy Inc. priced its $300 million of new bonds on Wednesday.

New FPL bonds continue to power up

However, another new utility credit - FPL Group's 7.875% notes due 2015 - continued to trade strongly, although its levels had widened slightly from the considerably tighter levels at which they had been seen trading on Wednesday.

The trader quoted the Juno Beach, Fla.-based electric power generating company's $450 million of new notes as trading at 555 bps bid, 545 bps offered. That was out a little from Wednesday's levels around 550 bps bid, 545 bps offered, but considerably tighter than the 596 bps over level at which the bonds had priced on Tuesday.

Even with the slight retrenchment on Thursday, "they've tightened up pretty smartly," the trader said.

du Pont finds the right formula

Another gainer was Tuesday's biggest deal, EI du Pont de Nemours & Co.'s $1 billion offering of new 5.875% five-year notes.

Those bonds were trading around at 420 bps bid, 415 bps offered on Thursday - in from 430 bps bid on Wednesday and well in from the 437 bps over spread at which the Wilmington, Del.-based chemical giant had priced the bonds Tuesday.

General Dynamics keeps tightening

The week's other $1 billion deal, General Dynamics Corp.'s new 5.25% notes due 2014, tightened Thursday to 345 bps bid, 340 bps offered, a little better than their Wednesday level at 350 bps bid, 343 bps offered.

The Fairfax, Va.-based defense contractor had priced its $1 billion of new bonds on Monday at 365 bps over, and they had begun tightening right out of the gate when they were freed for secondary dealings later in the session.

Hewlett Packard hovers higher

A trader said Hewlett Packard's 6.125% notes due 2014 "ripped tighter" at 385 bps bid, 375 bps offered. While that actually was out a little from Wednesday's level at 380 bps bid, 370 bps offered - it was still well in from the 460 bps over level at which the Palo Alto, Calif.-based computer and printer manufacturer priced its $2 billion of new bonds on Dec. 2.

Those bonds have consistently been among the most actively traded bonds in high-grade markets since then.

Cox widens out

An exception to the rule of mostly tighter new issues was Cox Communications Inc.'s new 9.375% notes due 2019, which had priced on Monday at 675 bps over and then widened out to around 687 bps bid, 680 bps offered. A trader saw the cable-TV operator's bonds Thursday at 690 bps bid, 685 bps offered.

Target bonds mixed

Among established issues, a market source saw Target Corp.'s 6.50% bonds due 2037 tighten up by some 30 bps on the session to levels around 530 bps over. However, the Minneapolis-based Number-Two U.S. discount retailer's 5.375% notes due 2017 were seen having widened out substantially during the session, closing at 624 bps over.

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