BB&T, GE Capital, Heinz offer bonds, GE exits FDIC program; Morgan Stanley down; spreads gain

By Andrea Heisinger and Paul Deckelman

New York, July 22 - The slow pace of bond sales continued Wednesday with offerings from BB&T Corp., General Electric Capital Corp. and H.J. Heinz Finance Co.

Russia's OAO Gazprom also did a partially dollar-denominated deal.

The GE Capital deal was likely the last one under the umbrella of the Federal Deposit Insurance Corp. The financing arm of GE got approval from the FDIC to exit from the Temporary Liquidity Guarantee Program, it announced in a press release.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 12 North American high-grade index widened by 1 basis point to a mid bid-asked spread level of 124 bps.

Advancing issues - which led decliners for a second straight session on Tuesday -- remained on top on Wednesday, by a nearly six-to-five margin.

Overall market activity, reflected in dollar-volume totals, fell nearly 16% from Tuesday's pace.

Spreads in general were seen a little tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year issue moved out about 5 bps on Wednesday to 3.54%.

Morgan Stanley's bonds were seen in retreat, as the New York-based financial services company reported a wider-than-expected second-quarter loss.

BB&T prices week's second offering

Financial services company BB&T priced $1 billion of 3.85% three-year medium-term notes at Treasuries plus 237.5 bps, a market source said.

The sale follows the company's $500 million sale of trust preferred securities Tuesday through its BB&T Capital Trust VI subsidiary.

BB&T Capital Markets, Morgan Stanley & Co. Inc. and UBS Investment Bank were bookrunners for Wednesday's sale.

The issuer is based in Winston-Salem, N.C.

GE Capital offers FDIC notes

General Electric Capital priced $650 million of 2% notes due 2012 at Treasuries plus 56.5 bps, according to an FWP filing with the Securities and Exchange Commission.

They were sold with the guarantee of the Federal Deposit Insurance Corp.

Bookrunner was Citigroup Global Markets.

The funding arm of General Electric is based in Fairfield, Conn.

Heinz sells 30-year privately

H.J. Heinz Finance priced $250 million of 7.125% 30-year notes at Treasuries plus 270 bps, a market source said.

Full terms for the deal were not available at press time.

Bookrunners were J.P. Morgan Securities, Deutsche Bank Securities and UBS Investment Bank, the source said.

The offering was done via Rule 144A.

The financing arm of food maker H.J. Heinz Co. is based in Pittsburgh, Pa.

Volume set to pick up

The coming week should see an uptick in new offerings, a source said late Wednesday. "It was another quiet one today," he said. "[There was] nothing much going on, other than a couple of smaller ones."

He rested the blame squarely on the shoulders of the continued earnings announcements from industrial names.

"We're still in earnings season," he said. "It should be over this week."

After that, there are no guarantees of a rush of new deals, a syndicate source said.

"There are things in the pipeline," he said. "I'm not sure if there's anything big away, but all ours are smaller. There should still be a couple [of deals] this week."

Wednesday's deals were "a weird mix," the source said. "That Heinz one kind of came out of the woodwork," he said. It was "kind of surprising," to see a second deal this week from BB&T, he added.

Gazprom offers bonds

From the emerging markets, Gazprom priced more than $2.5 billion worth of bonds in dollar- and euro-denominated tranches, a market source said.

A $1.25 billion five-year tranche was priced at par to yield 8.125% with a spread of Treasuries plus 573.6 bps.

The bonds priced at the tight end of guidance of 8.25%, which was revised from 8.5%.

JPMorgan and Morgan Stanley acted as bookrunners for the Rule 144A and Regulation S deal.

A €850 million five-year, six-month tranche was also included in the deal.

Proceeds from the sale will be used to refinance existing debt and for general corporate purposes.

The government-run energy firm is based in Moscow.

GE Capital pulls from FDIC program

GE Capital got approval from the FDIC to exit from the Temporary Liquidity Guarantee Program, under which it has issued many deals.

In a press release Wednesday, the company explained it was now able to borrow funds without government backing.

GE Senior Vice President and Treasurer Kathryn Cassidy said: "Today's plan to exit from TLGP affirms the strength of GE Capital's funding and liquidity position, including reduced reliance on government funding programs and our ability to access non-guaranteed debt markets."

She added that the company has issued $12 billion in long-term debt outside the program. Bonds issued with the guarantee could mature no later than 2012.

A market source said he was somewhat surprised at the news, but that "it will give them more options. It will let them tap the market more freely."

The announcement followed two FDIC-backed notes from GE Capital this week.

New BB&T bonds seen likely to firm

A trader said that the new BB&T 3.85% notes due 2012, which priced fairly late in the session, had not yet been freed for secondary dealings. However, he anticipated that the notes would tighten to around the 225-223 area, from the 237.5 bps spread over comparable Treasuries at which the Richmond, Va.-based regional bank had priced its $1 billion mega-deal.

New Citigroup issue slightly wider

Also among recently priced financial paper, a market source saw Citigroup Inc.'s 8.125% bonds due 2039 quoted at a spread of 383 bps over Treasuries.

That was a little wide of the 380 bps over spread at which the New York-based banking giant had priced its $2.5 billion offering of non-FDIC-backed notes on Monday.

Morgan Stanley bonds seen weaker

A trader said that Morgan Stanley's bonds all seemed "a little bit lower" on the day, after the financial company put out its earnings.

A market source saw Morgan's 7.3% notes due 2019 some 33 bps wider on the day at 250 bps over, on very heavy volume - among the heaviest in high grade - of over $60 million as of mid-afternoon, and said "it'll likely get even heavier."

Morgan Stanley's 6.25% notes due 2017 was seen out some 35 bps at the 235 bps level.

Morgan Stanley reported that it had a second-quarter net loss, after paying preferred dividends, of $1.26 billion, or $1.10 per share. That was a sharp deterioration from its year-earlier profits of $1.06 billion, or $1.02 per share.

It blamed the losses mostly on charges it took to cover continuing losses in its real estate investments and its repayment of federal bailout money.

The per-share loss in the latest quarter was more than double the roughly 50 cents per share of red ink which Wall Street had been expecting.

TJX continues to firm

Apart from the financials, TJX Cos. Inc.'s new 4.20% notes due 2015 continued to firm smartly from the levels at which they had priced on Monday.

A market source saw the Framingham, Mass.-based retailer's bonds at as tight as 105 bps over - versus the 170 bps over level at which the $400 million deal - upsized to meet market demand from an originally planned $250 million - had priced.

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