Sweden, F.N.B. price notes during quiet session; Glencore, Alcoa down; bank paper softens

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 29 – Sweden and F.N.B Corp. priced the high-grade session’s only reported new issues on Tuesday as softer market conditions again kept the majority of potential issuers on the sidelines.

The sovereign sold a $1 billion issue of three-year notes in line with price talk at mid-swaps plus 4 basis points.

Meanwhile, F.N.B. came to market with a $100 million offering of 10-year subordinated notes.

In other primary happenings, International Bank for Reconstruction and Development (World Bank) announced plans to offer a benchmark issue of notes in three- and seven-year tranches.

Roughly $3.3 billion of new investment-grade issuance has priced amid the sour tone the market has seen so far this week.

Sources expect primary activity to resume on Wednesday, though the week’s supply is unlikely to reach earlier predictions of around $30 billion.

The Canadian primary market was quiet on Tuesday.

“We didn’t have a great close today, just barely in the green,” a syndicate source said. “It’s going to take a couple of days of green before we get a new issue on the screen.”

In the secondary market, Glencore Funding LLC’s bonds (Baa2/BBB/) remained down after parent company Glencore plc’s stock hit a new low on Monday on commodity market concerns. Glencore’s stock gained on Tuesday and was up 16.95%.

Alcoa Inc.’s split-rated bonds (Ba1/BBB-/BB+) were off following the company’s announcement on Monday that it will form into two independent publicly traded companies.

In other secondary trading, bank paper was seen about “3-4 [bps] wider” on Tuesday, a source said.

Citigroup Inc.’s 3.3% senior notes due 2025 were unchanged.

JPMorgan Chase & Co.’s 3.9% senior holding company notes due 2025 eased 5 bps in the secondary market.

Morgan Stanley’s 4% senior notes due 2025 headed out 3 bps weaker.

HSBC Holdings plc’s 4.25% subordinated notes due 2025 were 5 bps wider.

Bank of America Corp.’s 3.875% senior notes due 2025 also traded 5 bps wider over the session.

The Markit CDX North American Investment Grade 25 index ended 1 bp weaker at a spread of 93 bps on Tuesday.

Sweden taps market

Sweden priced a $1 billion offering of 1% three-year notes (Aaa/AAA/AAA) on Tuesday at mid-swaps plus 4 bps, according to a market source.

Pricing was in line with guidance set in the area of mid-swaps plus 4 bps.

The notes sold at 99.879 to yield 1.041%, or Treasuries plus 10.75 bps.

Bookrunners for the Rule 144A and Regulation S deal are Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Nearly 40 investors took part in the deal, according to a news release, and the deal’s order book exceeded $1.5 billion.

Central banks accounted for 77% of investors, fund managers 13%, banks 6% and insurance and corporates 4%.

Around 47% of investors were from Asia, 40% from emerging Europe and Asia, 8% from the United States and 5% from Latin America.

“Despite the turbulent financial environment, we saw very strong support from dollar investors even this time,” said Maria Nortstrom, the head of funding at the Sweden National Debt Office, in the release.

F.N.B. prices notes

Also during Tuesday’s session, F.N.B. sold $100 million of 4.875% subordinated notes due Oct. 2, 2025, according to a company news release.

Bookrunners were RBC Capital Markets LLC and Sandler O’Neill + Partners LP.

The Hermitage, Pa.-based bank will use the proceeds for general corporate purposes.

World Bank sets talk

Meantime, World Bank set price talk for a benchmark offering of notes in three- and seven-year tranches, a market source said.

The three-year notes are talked in the mid-swaps plus 8 bps area, and the seven-year notes are talked in the area of mid-swaps plus 20 bps.

Bookrunners for the issue (Aaa/AAA/AAA) are BofA Merrill Lynch, Citigroup, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The issuer is based in Washington, D.C.

Alcoa drops

Alcoa paper continued to decline Tuesday following news out Monday regarding the aluminum maker splitting itself into two separate companies.

Alcoa’s 5.125% notes due 2024 traded on Tuesday afternoon at 82 bid, 83 offered, a trader said.

Another trader saw the 5.125% notes slipping almost a point to 83¼. However, a second market source called the issue off 4 points at 83 bid.

The company priced $1.25 billion of the senior notes at par to yield 5.125% on Sept. 17, 2014.

Alcoa’s 6.15% notes due 2020 headed out at 98 bid, according to another trader.

The notes priced in a $1 billion offering on July 26, 2010 at 99.871 to yield 6.167%.

Alcoa will spin off its plane and car parts business, a unit that has seen faster growth, from its traditional aluminum business. The company has struggled as commodity prices have dropped, especially amid an aluminum glut.

“Any of these commodity and mining guys are just getting clobbered,” a trader said.

Alcoa is a New York-based aluminum producer.

Glencore down

Glencore Funding’s 2.875% notes due 2020 traded late afternoon at 77 bid, 79.5 offered, according to a trader.

Glencore Funding sold $1 billion of the five-year notes on April 8 at 99.903 to yield 2.896%.

The company’s 4% notes due 2025 traded at 71 bid, 73 offered in secondary trading.

The company sold $500 million of the 10-year notes in the April 8 offering at 99.13 to yield 4.107%.

The funding vehicle for Glencore International plc, a privately held supplier of commodities and raw materials to industrial consumers, is based in Baar, Switzerland.

Citigroup steady

Citigroup’s 3.3% senior notes due 2025 were flat at 149 bps bid in the secondary market, a source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

JPMorgan eases

JPMorgan Chase’s 3.9% notes due 2025 traded 5 bps weaker over the day at 155 bps bid, a market source said.

JPMorgan Chase sold $2.5 billion of the notes (A3/A/A+) on July 14 at 155 bps over Treasuries.

The financial services company is based in New York City.

Morgan Stanley soft

Morgan Stanley’s 4% notes due 2025 were quoted 3 bps weaker on Tuesday at 165 bps bid, a source said.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

HSBC notes weaken

HSBC’s 4.25% notes due 2025 eased 5 bps to 239 bps bid during the session, according to a market source.

HSBC sold $1.5 billion of the notes (A2/A+) on Aug. 10 at a spread of Treasuries plus 212 bps.

The banking and financial services company is based in London.

Bank of America widens

Bank of America’s 3.875% senior notes due 2025 traded 5 bps weaker at 170 bps bid on Tuesday, a source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at 167 bps over Treasuries.

The financial services company based in Charlotte, N.C.

-Stephanie N. Rotondo contributed to this report

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