Senior Housing sells $25-pars; earnings, headlines keep primary quiet; Federal Realty tightens

By Aleesia Forni and Andrea Heisinger

New York, July 17 - The high-grade bond market lived up to predictions of being quiet on Tuesday as a deal from Senior Housing Properties Trust priced.

The $350 million of $25-par notes was priced by early afternoon at a coupon lower than guidance had suggested.

Goldman Sachs Group Inc. reported second-quarter earnings, following in the footsteps of other big financial names, including Citigroup Inc., which did the same on Monday.

Goldman announced that it made $6.63 billion of net revenue in Q2, according to a press release. This equated to earnings per share of $1.78, which compared to $1.85 from the same period of 2011.

The drop in earnings was due to deteriorating market conditions and lower activity levels for corporate and investing clients on account of conditions in Europe and global growth, Goldman's chairman and chief executive officer Lloyd C. Blankfein said in the release.

There was also testimony from Federal Reserve chairman Ben Bernanke before the Senate Banking Committee. Bernanke said the Fed continued to watch for signs of the economy being stuck and had some analysts thinking he was hinting at some sort of action from the central bank in coming months.

Earnings and Bernanke's comments didn't have much impact on high-grade volume since there wasn't much interest from companies wanting to price bonds.

"Nothing to report really," one source said. "This week's going to be slow."

There could be "a deal or two" in the market for Wednesday, the source said later.

In the secondary market, Bank of Montreal's 1.3% notes due 2014 tightened 20 bps, while paper from J.P. Morgan and Bank of Nova Scotia ended 1 bps better.

Meanwhile, Federal Realty Investment Trust's 3% notes due 2022 tightened in Tuesday's trading.

Senior Housing's preferreds

Senior Housing Properties Trust sold $350 million of 5.625% 30-year senior notes (Baa3/BBB-/) at par of $25, according to an FWP with the Securities and Exchange Commission.

Price talk was 5.75% to 5.875%, a trader said, with the deal pricing lower than that range.

He saw the paper trading at $24.86 bid, $24.92 offered in the gray market.

"It's a small deal, no selling group," he said.

Additionally, the trader said that price talk could be revised to around 5.7%, given how well the notes were already trading.

The company will apply to list the notes on the New York Stock Exchange.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds will be used to prepay the variable portion of a Federal National Mortgage Association secured term loan, to repay amounts outstanding under a revolving credit facility and for general business purposes, which may include funding possible future acquisitions of properties.

Senior Housing is a Newton, Mass.-based real estate investment fund focused on adult senior living options.

Federal Realty firms

The secondary market saw Federal Realty Investment Trust's recent issuance of $250 million of 3% 10-year notes trade at 157 bps offered, according to a market source.

The notes priced on Monday to yield Treasuries plus 170 basis points.

The real estate investment trust for retail and mixed-use buildings is based in Rockville, Md.

Bank of Montreal better

Also in the secondary, the 1.3% notes from Bank of Montreal due 2014 tightened 20 bps to 35 bps bid, according to a market source.

The bank priced $2 billion of notes in October at mid-swaps plus 50 bps.

J.P. Morgan tighter

The secondary saw the $3 billion 6.3% issue from J.P. Morgan due 2019 tighten 1 bps to 157 bps bid.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Nova Scotia tightens

Bank of Nova Scotia's 1.85% notes due 2015 tightened 1 bps on Tuesday to 59 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January.

Stephanie N. Rotondo contributed to this review

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