Idaho Power prices first mortgage bonds; rocky start to week may increase backlog

By Andrea Heisinger and Paul Deckelman

Omaha, July 7 - The week began with rocky market conditions, which may prevent the moderate issuance expected this week from happening.

A new issue from Idaho Power Co. was about the only thing to track for the day, sources said.

A backlog was expected to partially come out this week, following two weeks with little in the way of new issues.

"This week is already more exciting than the past couple have been," a source said Monday.

In the investment-grade secondary market Monday, advancing issues led decliners by an almost seven-to-six ratio, while overall market activity, reflected in dollar volumes, more than doubled from Thursday's pace, which had been curtailed by the shortened session ahead of the holiday weekend.

Spreads in general were wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note narrowed by 8 basis points to 3.90%, while the yield on the 5-year note also tightened by 8 bps to 3.19%

Idaho Power at tight end

Idaho Power priced $120 million in 6.025% 10-year first mortgage bonds at par to yield 6.025% with a spread of Treasuries plus 215 bps.

This was at the tight end of price talk of 215 to 220 bps, a source close to the issue said.

Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wachovia Capital Markets ran the books.

ANZ still poised

An issue from Australia's ANZ is still planned, a source close to the issue of five-year senior notes said Monday.

The issue was announced prior to a two-day roadshow two weeks ago, with pricing expected last week. It has not priced, and the company is still waiting to do the issue.

More information on the issue will emerge after decisions set for Tuesday, the source said.

Bookrunners are Goldman Sachs & Co., J.P. Morgan Securities Inc. and Citigroup Global Markets.

Waiting on a better market

Expectations for a productive week likely will not happen unless market conditions improve, a source said.

"It's going to be quiet tomorrow," he said. "It was pretty shitty out there today. Things weren't any better at the close."

Another source said they also had nothing planned for tomorrow, and were looking at another quiet week based on some potential earnings announcements and other negative headlines.

"I think people were expecting it to get better," he said, "but I don't know if that's going to happen."

Mostly muted trading

A trader said that the new Idaho Power 6.025% first mortgage bonds due 2018 "didn't really do much in secondary - it was only a $120 million deal."

Elsewhere, he said that among the non-financial names, "the volume was somewhat more muted. Spreads were situational in trading - slightly better in some spots, slightly weaker in other spots. We swapped spreads out and the IG-10 [index] ended up softening by the end of the day, and it seems as if the risk is more so to the downside."

Countrywide 4s tighten again

Countrywide Financial Corp.'s volatile 4% notes due 2011 were seen having firmed smartly, after having taken their lumps on Thursday, when they were quoted having widened out to around 585 bps; in Monday's dealings, the Calabasas, Calif.-based mortgage provider, now a unit of Bank of America, was being quoted as having come back in to around 300 bps. On a dollar-price basis, the Countrywide bonds were seen having risen more than 5 points on the session, in active dealings, to the mid-94 level.

However, its 5.80% notes due 2012 were seen going the other way, widening out to about 380 bps.

Financials wider

Among other financials, Countrywide parent B of A's 4.90% notes due 2013 were being quoted about 10 bps wider, at the 240 bps level. Lehman Brothers Holdings' 6 7/8% notes due 2018 were seen having widened a like amount to 345 bps. Morgan Stanley's 5.25% notes due 2012 moved out around 10 bps to 310 bps over.

Among the non-financial names, Time Warner's 6.875% notes were seen having narrowed about 10 bps to 275 bps.

In the credit-default swaps market, a trader said that the cost of protecting big-bank debt was about 3 bps to 6 bps wider, while CDS costs for the major brokerage names were out about 1 bps to 3 bps. But all told, he said, "not too much was going on."

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