Enel Finance, Tyco, Alliant Energy price bonds on decent tone; spreads steady, Tyco gains

By Andrea Heisinger

New York, Sept. 30 - Enel Finance International SA, Tyco International Finance SA and Alliant Energy Corp. were the main issuers on a somewhat slow Wednesday in the investment-grade market.

Both the Alliant Energy and Tyco deals were sold by early afternoon.

Italian utility Enel Finance priced its upsized $4.5 billion deal in three tranches as the last of the trio, but it was also by far the largest. It consisted of tranches in five, 10-and 30-year maturities. The size was initially $3 billion.

Tyco International priced $500 million of five-year notes. Alliant did half that, selling $250 million, also in a five-year maturity.

The tone was deemed "OK" by a market source late in the day. Much of the focus was on the Enel sale.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 13 North American high-grade index widened by 4 basis points to a mid bid-asked spread level of 102 bps.

Advancing issues continued to lead decliners Wednesday, by the same margin of nearly 10 to nine which had been seen Tuesday.

Overall market activity, reflected in dollar-volume totals, rose 28% from Tuesday's already busy pace.

Spreads in general remained relatively little changed, in line with mostly steady Treasury yields; for instance, the yield on the benchmark 10-years edged up by 1 bp on Wednesday to 3.30%.

The new Tyco International bonds were seen having come in notably from the spread over Treasuries at which that five-year issue had priced.

Enel sells multi-tranche $4.5 billion

Italy's Enel Finance International sold an upsized $4.5 billion of senior unsecured notes in three tranches, a market source said.

The size was increased from $3 billion, another market source said. Books totaled more than $8.5 billion, he said.

A $1.25 billion tranche of 3.875% five-year notes priced at a spread of Treasuries plus 162.5 bps.

A $1.75 billion tranche of 5.125% 10-year notes priced at Treasuries plus 187.5 bps.

The $1.5 billion tranche of 6% 30-year notes priced at Treasuries plus 200 bps.

The deal was done via Rule 144A and Regulation S.

Citigroup Global Markets, J.P. Morgan Securities, Bank of America Merrill Lynch, Barclays Capital, Credit Suisse Securities, Deutsche Bank Securities and Morgan Stanley ran the books.

Proceeds will be used for general corporate purposes, including repayment of debt.

The funding subsidiary of electric and gas utility company Enel SpA is based in Rome.

Tyco offers $500 million

Tyco International Finance sold $500 million of 4.125% five-year unsecured notes at Treasuries plus 187.5 bps, according to an FWP filing with the Securities and Exchange Commission.

The deal is guaranteed by Tyco International Ltd.

Bank of America Merrill Lynch and J.P. Morgan Securities were bookrunners.

Proceeds will be used for general corporate purposes including repayment of debt maturing in 2011.

The security, fire and industrial products company has its U.S. base in Princeton, N.J.

Alliant Energy sells five-year

Alliant Energy priced $250 million of 4% five-year senior notes early in the day at Treasuries plus 175 bps, according to an FWP filing with the SEC.

Bookrunners were Citigroup Global Markets and J.P. Morgan Securities.

The company plans to use $170 million of the proceeds to repay borrowings under a term loan agreement incurred to finance a portion of a tender offer for notes due 2030, and for general corporate purposes.

The electric and natural gas company is based in Madison, Wis.

Bonds turn sluggish

New deals were sparse for the middle of the week, and those that did get done were mostly small and priced early.

The outlier was the sale from Enel, which priced later, and left syndicate desks mopping up well after the market had closed.

"It was a big one," said a source at one of the main bookrunners. "We started it in the morning, but then it grew."

The sale was upsized by $1.5 billion as books expanded.

"There was heavy interest," the source said. "It was almost like government-backed or something."

The tone was "OK," another source said, adding that he didn't work on any deals for the day.

"We should see some more [this week], but nothing too major," he said.

The month of September closed out as one of the largest of the year, with $111.34 billion of bonds sold in the investment-grade market. Citigroup was the top underwriter for the month and the year-to-date, as well as the third quarter.

Tyco tightens up

When the new Tyco International Finance 4.125% notes due 2014 were freed for secondary dealings, a trader saw those bonds at 169 bps bid, 164 bps offered.

That was well in from the 187.5 bps level at which that $500 million of bonds had priced earlier in the session.

A second trader quoted the bonds as having been offered at 165 bps bid.

Alliant aftermarket a non-event

A trader said that Alliant Energy's new 4% notes due 2014 were being bid at around the same 175 bps level at which the $250 million deal had priced earlier in the session, with no right side seen.

A second trader said he had seen exactly "nada" doing in the company's bonds.

Enel deal little seen

The day's biggest deal, for Enel Finance SpA, a unit of Italian utility operator Enel SpA, did not have a similar impact on the secondary market, despite its over $4 billion total size.

A trader saw the 5.125% notes due 2019 offered at 178 bps over, but with no bid side. The company had earlier priced $1.75 billion of those notes at 187.5 bps over.

At another desk, a trader saw those 10-years bid at 186 bps over, and saw the Rome-based company's $1.25 billion of 3.875% notes due 2014 bid at 160 bps over, versus 162.5 bps at the pricing.

Meanwhile, its $1.5 billion of 6% bonds due 2039 were quoted at 198 bps bid, versus 200 bps at the pricing.

The second trader said that no offered levels had been seen on those bonds, but "the bids were of decent size, like $5 million."

Citi volume surges

Speaking generally, the trader saw "the morning was a little busier in corporates than the afternoon, and I guess a lot of it was window-dressing" ahead of the end of the quarter.

There was "a lot of activity, from Trace reporting, in GE [Capital Corp.] and Citigroup."

In fact, a market source saw Citi's 8.5% notes due 2019 trading about 10 bps wider at 336 bps, on mid-afternoon volume of some $92 million, making it the most active investment-grade bond at that point.

But the New York banking giant's 5.5% notes due 2014 tightened smartly, by some 36 bps, to 274 bps., with over $61 million traded at mid-afternoon.

The trader meantime said "it seemed like spreads weren't doing too much of anything. They seemed like they started out wider this morning - but I don't know that any of that followed through during the day."

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