General Mills, Detroit Edison, British Columbia sell bonds; Time Warner Cable bonds widen

By Andrea Heisinger and Cristal Cody

New York, May 11 - General Mills, Inc., Detroit Edison Co. and the Province of British Columbia each tapped the high-grade debt market on Wednesday as issuance slowed down further from earlier in the week.

General Mills sold an upsized $700 million of notes in two parts. The deal size was increased from $600 million.

Adding to the string of utilities pricing bonds throughout the week was Detroit Edison. The electric company sold $250 million of 10-year mortgage bonds.

The Province of British Columbia sold $1.5 billion of five-year bonds in a sovereign deal that's AAA rated.

Japan Finance Corp. was in the market with a $2 billion sale of five-year notes that had been announced earlier in the week.

Issuance is not yet done for the week, sources said, although it's unlikely to be as busy as Monday or even Wednesday.

"I know of a couple of possible away from us," said one syndicate source.

Another said later that his desk didn't have anything definite for Thursday but that "there could be something big" in the market.

Bonds in the financial sector were mixed in trading, according to a source.

In other secondary activity, Time Warner Cable Inc.'s 4.125% notes due 2021 widened 3 basis points to 143 bps on Wednesday, a source said.

Overall investment-grade Trace volume was down 2% to about $12.3 billion, a market source said.

The series 14 Markit CDX North American Investment Grade index remained unchanged a second day from Monday's spread of 89 bps, according to Markit Group Ltd.

Treasuries rallied as investors moved away from stocks and commodities after the government's solid auction of 10-year notes on Wednesday. The rally sent yields down 4 bps to 6 bps across the bond curve. The 10-year note yield fell 6 bps to 3.15%, and the 30-year bond yield fell to 4.3% from 4.35%.

General Mills upsizes

Consumer foods company General Mills upsized its sale of $700 million of senior notes (Baa1/BBB+/BBB+) in two parts, said a source close to the sale.

The size was increased by $100 million from $600 million, a source said. There wasn't a particular tranche that was upsized as the size went out generically at $600 million, he said, and then was increased at the launch.

"It went great," he said of the trade overall. "It priced flat to the secondary, and there was $1.5 billion on the book. It was nice to have the flexibility of fixed or floating-rate [notes]."

There has been good demand lately for floating-rate notes, and that is partly due to them being more price sensitive, the source said.

"We were able to push against the fixed-rate [in pricing]," he added.

The $400 million of three-year floating-rate notes priced at par to yield Libor plus 35 bps. The spread over Libor was initially talked in the high-30s, low-40s, a source said, and that was later revised to 35 bps to 37 bps over Libor. The notes priced at the tight end of that range.

The second part was $300 million of 1.55% three-year notes priced at Treasuries plus 63 bps. This tranche had whispered talk in the 65 bps to 70 bps range and then was lowered to the 65 bps area, plus or minus 2 bps. The notes later priced at the tight end of that revised guidance.

Barclays Capital Inc. and Citigroup Global Markets Inc. were the bookrunners.

Proceeds are being used to repay a portion of outstanding commercial paper.

The consumer foods company is based in Minneapolis.

Japan Finance sells $2 billion

Japan Finance priced $2 billion of 2.5% five-year notes (Aa2/AA-) to yield Treasuries plus 64.6 bps, according to an FWP filing with the Securities and Exchange Commission.

The sale was announced on Monday.

Bank of America Merrill Lynch, Barclays Capital, Citigroup and HSBC Securities (USA) Inc. were the bookrunners.

Proceeds will be used for the operations of the Japan Bank for International Cooperation.

The sale is guaranteed by Japan.

The lender to the general public and Japanese businesses is based in Tokyo.

British Columbia's bonds

The Province of British Columbia sold $1.5 billion of 2.1% five-year bonds (Aaa/AAA/AAA) to yield Treasuries plus 25.55 bps, or mid-swaps plus 5 bps, according to an FWP filing with the SEC.

The bookrunners were Bank of America Merrill Lynch, CIBC World Markets Corp. and RBC Capital Markets, LLC.

Proceeds are being paid into the Consolidated Revenue Fund of British Columbia and possibly used to lend money to British Columbia government bodies.

The issuer is based in Victoria, B.C.

Detroit Edison's 10-year

Detroit Edison sold $250 million of 3.9% 10-year general and refunding mortgage bonds (A2/A/A-) to yield 77 bps over Treasuries, according to an FWP filing with the SEC.

J.P. Morgan Securities LLC, RBS Securities Inc. and UBS Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes.

The electric utility is based in Detroit.

Financials mixed

Paper in the financial sector was mixed in secondary trading, a source said.

Bank of America Corp.'s 6.5% notes due 2016 widened 5 bps to 190 bps on Wednesday, while the Charlotte, N.C.-based financial services company's 7.625% notes due 2019 firmed 2 bps to 164 bps.

Trading in Citigroup Inc.'s bonds was similar. The New York bank's 6.375% notes due 2014 traded 2 bps weaker at 164 bps over Treasuries. The 8.5% notes due 2019 firmed to 148 bps from 152 bps on Tuesday, according to the bond source.

New York-based Goldman Sachs Group, Inc.'s long bonds moved out in trading. The 6.75% bonds due 2037 widened to 219 bps from 213 bps, the source added.

Time Warner weaker

Time Warner Cable's 4.125% notes due 2021 widened 3 bps to 143 bps in the secondary market on Wednesday, a source said.

The notes (Baa2/BBB/BBB) remain tighter than issue price. The company sold the bonds on Nov. 19 at Treasuries plus 155 bps.

The cable TV operator is based in New York.

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