Final day of record week sees no new deals; Credit Agricole details sale; Reynolds tightens

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Sept. 13 - A week that saw a record-breaking new issue from Verizon Communications Inc. ended with no new deals on Friday.

Verizon came to market with a $49 billion offering in eight parts on Wednesday, shattering the previous $17 billion record held by Apple Inc.

Apple priced its six-part deal in April.

The terms of Credit Agricole SA's $1 billion issue of 8.125% tier 2 contingent capital notes due Sept. 19, 2023 were given on Thursday, a market source said.

The notes sold at par in a Rule 144A and Regulation S transaction.

Verizon's mammoth deal helped the week's total high-grade issuance reach roughly $60 billion, according to Prospect News data.

Though the week ahead will see a two-day Federal Open Market Committee meeting on Tuesday and Wednesday, syndicate sources are expecting issuance to reach between $15 billion and $20 billion.

In Friday's preferred stock market, a trader noted that investors were being a little cautious with Citigroup Inc.'s newly priced $900 million issue of 7.125% fixed-to-floating-rate series J noncumulative perpetual preferreds, a deal that priced Thursday.

"People are still looking at how they are going to play these higher rates," he said, adding that the deal overall "looked really cheap."

The new issue freed up in early trading and was pegged at $24.85 as of midday.

Another market source said the new issue was not all that active given that it was Friday. Around noon, there was a $24.78 bid for paper, he said.

In the secondary market, investment-grade bonds traded softer in the early afternoon with spreads out 1 basis point to 2 bps before closing the day slightly tighter, market sources said.

The Markit CDX Series 20 North American Investment Grade index firmed 1 bp to a spread of 77 bps.

Verizon's new bonds remained stronger in the secondary market, sources said.

"All trading has been dominated by Verizon," a trader said on Friday.

In other new-issue trading, Reynolds American Inc.'s new 10-year and 30-year senior notes tightened, with the long bonds more than 10 bps better, a trader said.

Weyerhaeuser Co.'s 4.625% notes due 2023 traded flat to 1 bp wider in the secondary market.

Credit Agricole tier 2 notes

The terms for the recent deal from Credit Agricole were obtained on Friday. The company sold a $1 billion issue of 8.125% 20-year tier 2 contingent capital notes at par, according to a market source.

The paper priced under Rule 144A and Regulation S on Thursday.

Credit Agricole, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co., HSBC Securities (USA) Inc. and UBS Securities LLC were the joint bookrunners.

The retail banking group is based in Paris.

Reynolds American better

Reynolds American's $1.1 billion offering (Baa2/BBB-/) that priced on Thursday traded 4 bps to 11 bps better on Friday, a trader said.

The 4.85% senior notes due 2023 tightened to 191 bps bid, 180 bps offered. The company sold $550 million of the notes at a spread of Treasuries plus 195 bps.

The tranche of 6.15% bonds due 2043 firmed to 219 bps bid, 218 bps offered, the trader said. Reynolds American sold $550 million of the bonds at a spread of Treasuries plus 230 bps.

Reynolds American is a Winston-Salem, N.C.-based holding company for tobacco product manufacturers.

Weyerhaeuser flat to softer

Weyerhaeuser's 4.625% notes due 2023 (Baa3/BBB-/) eased to 176 bps bid, 175 bps offered in secondary trading on Friday, a trader said.

The Federal Way, Wash.-based timber company sold $500 million of the notes at Treasuries plus 175 bps on Thursday.

CDS costs mostly unchanged

Investment-grade bank and brokerage CDS costs ended mostly flat, according to a market source on Friday.

Bank of America Corp.'s CDS costs were unchanged at 102 bps bid, 106 bps offered. Citigroup Inc.'s CDS costs closed flat at 94 bps bid, 99 bps offered. JPMorgan Chase & Co.'s CDS costs were unchanged at 84 bps bid, 88 bps offered. Wells Fargo & Co.'s CDS costs eased 1 bp to 60 bps bid, 64 bps offered.

Merrill Lynch's CDS costs ended flat at 97 bps bid, 103 bps offered. Morgan Stanley's CDS costs went out unchanged at 133 bps bid, 138 bps offered. Goldman Sachs Group, Inc.'s CDS costs closed the day flat at 123 bps bid, 127 bps offered.

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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