Alliant Energy units sell bonds with little premium; GE Capital tightens on preferred stock sale

By Andrea Heisinger

New York, Oct. 1 - Two subsidiaries of Alliant Energy, Wisconsin Power & Light Co. and Interstate Power & Light Co., priced debentures Wednesday as the markets waited for a Senate vote on the financial bailout bill.

Syndicate desks looked forward to a resolution to the bill, which had been expected to be easily and quickly passed.

A secondary source, after commenting that trading was again very, very quiet, said everyone was just waiting to see what the outcome of the Senate vote would be.

"It looks like it's going to pass," he said, "but we've been to this party before."

Separately, General Electric Co. announced it is selling $3 billion in preferred stock to Warren Buffett's Berkshire Hathaway, Inc. in a private placement and offering $12 billion of common stock to the public. Its notes tightened in response.

Alliant Energy units price debt

Two subsidiaries of Alliant Energy priced deals Wednesday as the company saw an open window of opportunity.

Wisconsin Power & Light priced $250 million of 7.6% 30-year debentures at 98.264 to yield 7.75%, or Treasuries plus 349.9 basis points.

And Interstate Power & Light priced $250 million of 7.25% 10-year senior debentures at 99.129 to yield 7.375%, or Treasuries plus 358.2 bps.

Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were bookrunners for both issues.

The deals went a little differently than normal, a source said.

"It was slower than the usual deal in terms of accounts coming into the books," he said. "It has to do with the credit markets and the [government bailout] plan."

The issues were "more an opportunistic call," he said, with syndicate desks giving them a green light Wednesday morning.

There was no real new issue concession, the source said. At investor requests, the issues were priced at a coupon rather than a spread.

"There was an open window, and they took comfort in the [Senate] vote," he said.

Popular announces pricing

Puerto Rico-based lender Popular, Inc. announced it has sold $100 million of three-year notes with 6.66% and 7% coupons in a private placement.

The deal includes $75 million of the 7% notes and $25 million of the 6.66% notes, all issued on Sept. 25.

GE tightens on Buffett's backing

The 5.5% notes due 2011 of GE subsidiary General Electric Capital Corp. were seen tightening more than 25 bps late Wednesday after GE announced it is selling $3 billion in preferred stock to Warren Buffett's Berkshire Hathaway, Inc. in a private placement and $12 billion of shares in a public offering.

The company took the step, along with sale of common stock, in order to help maintain capital and its AAA credit ratings.

The company gave some details of the preferreds in a press release, with the perpetual shares paying a 10% dividend. They are callable after three years at a 10% premium.

Goldman Sachs was tapped as bookrunner for the common share sale, with Banc of America Securities LLC, Citigroup, Deutsche Bank Securities Inc., JPMorgan and Morgan Stanley likely to be added to the list.

Last week, Buffett showed his confidence in the financial world by investing $5 billion similarly in Goldman Sachs through preferred stock.

Primary looks ahead

With approval from the Senate expected Wednesday night, syndicate desks, investors and issuers are looking ahead to the U.S. House of Representatives' second vote.

A sense of uncertainty hung in the air Wednesday afternoon as it seemed most issuance would have to wait until the coming week.

"It's hard to tell," a source said about when the issuance window would reopen. "Tomorrow we could maybe have some issuers, but we're going to have to see what the outcome of the plan is."

The plan, estimated at $700 billion, is considered highly likely to pass in the Senate, and a second House vote is supposed to take place Friday.

The stock market rebounded again Wednesday, mostly on the likelihood of the plan passing the Senate.

Among revisions made, in hopes that it will pass the House, were tax breaks for businesses and alternative energy, and higher levels of government insurance for bank deposits.

Secondary quiet

There continued to be little trading in the investment-grade secondary market Wednesday afternoon as the market awaited the outcome of a Senate vote on the financial bailout bill.

A source said that the focus continued to be on financial names, with GE Capital moving around on news of its possible financial troubles and subsequent $3 billion capital infusion from Berkshire Hathaway.

There were no new levels available after pricing of the day's two deals from Interstate Power & Light and Wisconsin Power & Light, the source said.

Banks mixed, brokers wider

Bank names were seen anywhere from 15 bps tighter to 5 bps wider, a trader said Wednesday afternoon.

Citigroup Inc. and Wachovia Corp. were seen 15 bps tighter on the acquisition of the latter's banking operations.

Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. were all seen about 5 bps wider, the trader said.

Broker names were seen largely wider.

Merrill Lynch was seen widening 25 bps, while Goldman Sachs was out 40 bps.

Morgan Stanley widened by about 2.5 bps to 1,250 bps bid, 1,400 bps offered from 1,500 bps bid, 1,800 bps offered.

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