Citigroup prices record $12 billion FDIC-backed deal; Lubrizol, Jersey Central P&L firm in trading

By Andrea Heisinger

New York, Jan. 23 - In a surprising cap to the week, Citigroup Inc. priced a record $12 billion issue of notes backed by the Federal Deposit Insurance Corp. Friday.

The deal, in four tranches, priced late in the day and more than doubled the week's total bond issuance among investment-grade issuers.

The day's other issuance came from Israel Electric Corp. Ltd.

In the secondary, issues priced Thursday from Lubrizol Corp. and Jersey Central Power & Light Co. were seen making nice gains in an otherwise low-volume environment.

Citi prices record FDIC deal

Citigroup topped the previous record amount for an FDIC-backed issue, pricing $12 billion in four tranches late Friday.

The previous record holder was General Electric Capital Corp., which priced a $10 billion issue on Jan. 5.

Friday's issue was split between floating- and fixed-rate notes.

The $2.25 billion of floaters due 2010 priced at par to yield three-month Libor plus 10 basis points.

A second $1.9 billion floating-rate tranche due 2012 priced at par to yield three-month Libor plus 33 bps.

A third $350 million floating-rate tranche due 2012 priced at par to yield one-month Libor plus 45 bps.

The lone fixed-rate tranche was $7.5 billion 2.125% bonds due 2012, which priced at 99.086 to yield 2.1875%, or Treasuries plus 105.75 bps.

Citigroup Global Markets Inc. was the bookrunner.

The issue was priced overnight, a source close to the deal said, with books opening late Thursday.

XL Capital plans remarket

XL Capital Ltd. announced a remarketing of its 5.25% senior notes due 2011 on Friday in a news release.

The remarketing is set to begin Feb. 3, with settlement Feb. 17.

Goldman Sachs & Co. is remarketing agent.

These bonds will comprise part of the company's 7% equity security units.

Proceeds are to be used to satisfy the purchase price for the company's ordinary shares sold to holders of the equity security units under forward purchase contracts.

Israel Electric sells bonds

Israel Electric priced $500 million 9.375% bonds due 2020 on Friday under Rule 144A and Regulation S.

The bonds were priced at 99.158 to yield 9.5%, or Treasuries plus 684 bps.

Citigroup and J.P. Morgan Securities Inc. ran the books.

Week's issuance balloons at end

Before Friday, the week's issuance totaled less than $8 billion. Then Citigroup priced its $12 billion issue, which ballooned the total to more like $20 billion. This still doesn't put it close to the previous week's total of about $33 billion, but it's close.

A source called the day "quiet" despite this large issue. It was about the only game in town.

"There wasn't much going on," the source said. "A lot of people don't even count that [Citi] issue because it's done off the agency desk."

No one was willing to speculate on the coming week, especially after the lull of this week.

"We're still in earnings season, so that kind of takes some [companies] out," a source said. "There could be a nice amount, but if we see more bad earnings, who knows?"

New Lubrizol tightens

The bonds priced Thursday by Lubrizol were seen in a good amount Friday.

The 8.875% notes due 2019 priced at Treasuries plus 640 bps and were seen at 590 bps bid, a trader said. There was no offer available.

Jersey Central Power 40 bps tighter

The 7.35% bonds due 2019 priced Thursday by Jersey Central Power & Light were more than 40 bps tighter in the secondary Friday, a trader said.

The notes priced at Treasuries plus 475 bps and were trading at 435 bps bid, 420 bps offered.

Israel Electric bonds trading

The new 9.375% bonds due 2020 from Israel Electric were seen trading at a dollar price of 101 to 101.25 in the secondary, a trader said. They priced earlier in the day at 99.158.

GE bonds generally unmoved

General Electric Capital's outstanding bonds were weaker to unchanged in the secondary Friday afternoon, a trader said.

The parent company, General Electric Co., released its fourth-quarter earnings Friday, which were down but met analysts' expectations.

The operating profit for the quarter was $3.9 billion, down 43% from the $6.8 billion earnings at the same time a year ago.

GE Capital bonds top trading

Two outstanding issues from General Electric Capital were seen topping trading early Friday afternoon, after news of the company's earnings drop hit headlines.

The bonds topping trading are both FDIC-backed.

Taking the No. 1 position was the company's 2.2% due 2012, with its 3% due 2011seen at second.

Other financial names were also seen near the top of trading, with JPMorgan Chase & Co.'s 3.125% notes due 2011 also selling heavily.

Secondary seen dull

Trading was on the slow side late Friday afternoon, a trader said, with little in the way of new issues, or recent issues for that matter.

It was a "very quiet day," he said.

Morgan Stanley, Kraft top movers

Morgan Stanley and Kraft Foods Inc. were seen as two of the day's top movers in investment-grade trading.

Kraft's 6% bonds due 2013 were seen widening more than 70 bps.

The company was in the news Friday after claiming its products containing peanut butter were safe as others were recalling due to a salmonella scare.

Morgan Stanley was seen moving the other direction, with its 5.625% notes due 2012 coming in about 70 bps by later afternoon.

Bank, broker CDS tighter

Bank credit-default swaps were seen flat to 10 bps tighter Friday, a trader said.

Broker names were seen 5 bps to 10 bps tighter, he said.

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