Primary takes breather, assesses week's $5.85 billion issuance volume; Thursday's issues tighten

By Andrea Heisinger

New York, Oct. 31 - The investment-grade primary market took a breather Friday following the busiest day it has seen in recent weeks.

All of Thursday's issues continued their success Friday, tightening considerably in the secondary.

"They just keep on going," a source said.

The primary market was quiet Friday as syndicate desks and potential issuers watched how Thursday's issues performed in the secondary market.

"They all looked good," a source said. "They did pretty good at pricing, so it's not surprising."

It's possible the coming week could see a bump in issuance based on the performance of Verizon Communications and the week's other issues.

Sources were not eager to speculate about how large the issuance might be.

"It's a long time until Monday," a source said. "We've seen bad things happen over the weekend."

It's also unlikely there will be many deals Monday as issuers reassess market conditions.

Sources said it's a relief to see more issuers braving the market, even though it's sporadic.

"I think by now a lot of people know they're going to have to pay to get [a deal] done," a source said. "A lot of them are in this backlog and have been waiting a while."

One worry for some companies is getting their issue in before the end of the year, with some waiting since August or before.

"There are a couple of holidays coming up, and then it's December; so yeah, there are still a lot of issuers out there," a syndicate source said.

Week ends with $5.85 billion

Friday meant the end of both the week and month, both of which ended better than they began.

The week saw $5.85 billion in new issues, with the bulk pricing Thursday.

"Issuers saw a window open this week," a source said. "We're kind of hoping it keeps going [into next week]."

The week was not without its snags. Coca-Cola Enterprises Inc. intended to price its issue Tuesday but postponed it until Wednesday morning after a ratings outlook downgrade by a Standard & Poor's analyst.

The issue ended up pricing slightly wider than the level at which it was launched.

Another notable issue came from Verizon Communications Inc., which priced $3.25 billion in two tranches Thursday. It was upsized after price whispers at $2 billion and up.

J.P. Morgan top underwriter

J.P. Morgan Securities Inc. continued its reign, topping both the year-to-date and monthly list of underwriting volume.

The company handled $4.15 billion in investment-grade bond issues for October and has done $91.62 billion so far this year.

Citigroup was second in both categories.

The month had $27.63 billion in deals.

Verizon bonds in further

The two tranches of notes priced Thursday from Verizon Communications tightened further in the secondary market Friday afternoon, a trader said.

The 8.75% 10-year notes tightened the most and were seen at 449 basis points bid, 444 bps offered from pricing at 487.5 bps.

The 8.95% 30-year notes tightened about half as much, to 470 bps bid, 450 bps offered from 487.5 bps.

Kimberly-Clark in 40 bps

Thursday's issue of 7.5% 10-year notes from Kimberly-Clark Corp. was seen tightening to 325 bps bid, 320 bps offered, a trader said.

The notes, which were almost 10 times oversubscribed in the books, priced at 362.5 bps.

Estee Lauder tightens 50 bps

The new issue from Estee Lauder Cos. Inc. followed the trend of Thursday's other issues, tightening about 50 bps in the secondary, a trader said.

The 7.75% five-year notes were at 455 bps bid, 440 bps offered, from pricing at 500 bps.

Morgan Stanley tops trading

Outstanding bonds from Morgan Stanley were at the top of the secondary trading volume list Friday afternoon following a rally in financial names.

The 6.75% notes due 2011 from Morgan Stanley Dean Witter & Co. topped trading by volume with two other Morgan Stanley bonds in the top five.

General Electric Capital Corp.'s 6% notes due 2012 and an issue from Merrill Lynch & Co., Inc. were also high on the trading list.

Verizon day's big mover

An outstanding 6.1% bond due 2018 from Verizon Communications was one of the day's big movers. The issue was seen tightening more than 50 bps.

This came a day after the company's successful two-tranche issue that totaled $3.25 billion.

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