Citigroup prices to solid demand, joins M&T Bank in primary; Citi, M&T, Verizon tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, July 22 – Financial names continued to dominate the high-grade primary market on Tuesday, with Manufacturers and Traders Trust Co. and Citigroup Inc. bringing new deals.

Citigroup’s new $2 billion offering of five-year notes was met with solid demand, a source said, pricing around 10 basis points tighter compared to initial price thoughts.

The deal’s orderbook was around two times oversubscribed.

Tuesday’s primary also saw Manufacturers and Traders Trust, a subsidiary of M&T Bank Corp., sell a three-part $1.7 billion offering of senior notes.

There was also a $500 million add-on priced by Nederlandse Waterschapsbank NV.

So far this week, the investment-grade bond market has seen $8.75 billion of new issuance.

Sources had predicted the week to see around $15 billion of supply.

Investment-grade bond spreads tightened over the day, though trading remains light in typical summer fashion, sources said.

“It has been boring in secondary,” one trader said.

Citigroup’s 2.5% notes due 2019 traded about 1 bp tighter on the bid side going out.

M&T Bank’s offering of notes tightened 2 bps in the secondary market, a trader said.

Verizon Communications Inc.’s 6.55% bonds due 2043 remain active and traded slightly tighter versus Monday’s levels, a trader said.

The long bonds have the “most volume” of the company’s issues, the trader said.

Citigroup brings $2 billion

Citigroup was in Tuesday’s market with a $2 billion offering of 2.5% five-year senior notes priced with a spread of Treasuries plus 85 bps, an informed source said.

Pricing was tight of guidance.

The notes (Baa2/A-/A) sold at 99.939 to yield 2.513%.

Citigroup’s 2.5% notes due 2019 firmed to 84 bps bid, 82 bps offered in aftermarket trading, a trader said.

Citigroup Global Markets Inc. was the bookrunner.

The bank is based in New York.

M&T Bank three-parter

Manufacturers and Traders Trust priced $1.7 billion of senior notes (A2/A/) in three tranches, according to a market source.

The sale included $300 million of floating-rate notes due 2017 priced to yield Libor plus 30 bps.

A second tranche was $750 million of 1.4% three-year notes priced at 45 bps over Treasuries.

There was also $650 million of 2.25% five-year notes sold with a spread of Treasuries plus 65 bps.

M&T Bank’s 1.4% notes due 2017 traded tighter at 43 bps bid, 40 bps offered in the secondary market, according to a trader.

The 2.25% notes due 2019 firmed to 63 bps bid, 61 bps offered.

Bookrunners were Citigroup Global Markets, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC.

The company is a wholly owned subsidiary of M&T Bank Corp.

The bank is based in Buffalo.

NWB adds on

In other primary action, Nederlandse Waterschapsbank priced a $500 million add-on to its existing 0.75% senior notes (Aaa/AA+/) due 2016 on Tuesday at mid-swaps flat, an informed source said.

The notes were priced under Rule 144A and Regulation S.

Bookrunners were Barclays and RBC Capital Markets LLC.

The total issue size now sits at $1.5 billion, including $1 billion priced on March 19, 2013 at mid-swaps plus 25 bps.

The financial services company for the public sector is based in the Hague, the Netherlands.

Verizon firms

Verizon’s 6.55% bonds due 2043 (Baa1/BBB+/A-) traded in lots on Tuesday at 161 bps offered late Tuesday afternoon, a trader said.

The bonds were seen trading in the 163 bps-164 bps area on Monday.

Verizon sold $15 billion of the bonds at Treasuries plus 265 bps on Sept. 11.

The telecommunications company is based in New York City.

Bank/brokerage CDSs mostly flat

Investment-grade bank and brokerage CDS prices were mostly unchanged, according to a market source.

Bank of America Corp.’s CDS costs were 1 bp lower at 68 bps bid, 71 bps offered. Citigroup’s CDS costs were also unchanged at 66 bps bid, 69 bps offered. JPMorgan Chase & Co.’s CDS costs remained flat at 56 bps bid, 59 bps offered. Wells Fargo & Co.’s CDS costs were also unchanged at 46 bps bid, 51 bps offered.

Merrill Lynch’s CDS costs were unchanged at 73 bps bid, 77 bps offered. Morgan Stanley’s CDS costs were also flat at 66 bps bid, 71 bps offered. Goldman Sachs Group, Inc.’s CDS costs increased 1 bp to 73 bps bid, 78 bps offered.

Paul Deckelman contributed to this review.

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