Deutsche Telekom, Entergy Louisiana, Southern California Edison price; all tighten in secondary trading

By Andrea Heisinger

New York, Aug. 11 - A solid close to the investment-grade primary market Friday led to an equally solid start to the day Monday, leading to issues from Deutsche Telekom International Finance BV, Entergy Louisiana, LLC, Southern California Edison Co. and HSBC USA Inc.

The day ended with a good tone, which will hopefully carry into Tuesday, a market source said.

The secondary market also saw a bump in volume.

One trader said he was kept fairly busy "especially for a Monday."

Deutsche Telekom at tight end

The largest issue of the day came from the unit of Deutsche Telekom.

The phone and internet company priced $1.5 billion of notes in two tranches.

The $650 million of 5.875% five-year notes priced at 99.837 to yield 5.913% with a spread of Treasuries plus 265 basis points.

This was at the tight end of price talk of 265 to 270 bps, a source close to the deal said.

The second tranche was $850 million of 6.75% 10-year notes priced at 99.985 to yield 6.752% with a spread of Treasuries plus 275 bps.

This was in line with price talk of 275 bps area.

Based on levels for the company's outstanding 10-year bond, this put the new issue concession at about 15 bps, a source said.

Banc of America Securities LLC, Credit Suisse Securities and Lehman Brothers Inc. ran the books.

SoCalEd upsizes

Electric company Southern California Edison priced an upsized $400 million of 5.5% 10-year first mortgage bonds at 98.432 to yield 5.575% with a spread of Treasuries plus 155 bps.

The size of the issue was increased from $300 million, a source said.

Credit Suisse, RBS Greenwich Capital and Merrill Lynch, Pierce, Fenner & Smith Inc. ran the books.

Entergy Louisiana priced $300 million of 6.5% 10-year first mortgage bonds at 99.931 to yield 6.509% with a spread of Treasuries plus 248 bps.

This was in line with price talk of 248 bps, a source said.

KeyBanc Securities, Lehman Brothers Inc. and Wachovia Capital Markets were bookrunners.

HSBC USA priced $250 million of two-year floating-rate notes Monday at par to yield three-month Libor plus 100 bps.

HSBC Securities ran the books.

Financials announce retail issues

Two financial services companies announced upcoming issues of preferred securities and capital securities Monday.

Wells Fargo Capital XIV announced it will price 60-year enhanced trust preferred securities at $25 each. A source close to the deal said it is expected to price Tuesday.

The preferreds will be non-callable for five years.

Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co. Inc. are bookrunners.

TCF Capital I, a subsidiary of TCF Financial Corp., is planning to price 60-year capital securities for $25 apiece. They will be non-callable for five years.

RBC Capital Markets is bookrunner.

MetLife plans securities remarketing

MetLife, Inc. announced Monday it will remarket its senior debt securities due 2018, which will be non-callable until August 2010.

The securities were originally marketed as 4.82% junior subordinated notes due 2039. Under the terms of a previous offering of common equity units, the company was obligated to have one or more investment banks remarket the debentures on behalf of the holders.

Agents for the remarketing are Banc of America Securities and Barclays Capital.

Upbeat tone for days ahead

Sources Monday were more optimistic than in recent weeks due to several successful issues.

There are more on the horizon, a source said.

"As long as nothing happens, we should see this continue tomorrow," he said.

Another went so far as to say the flow of new issues should continue for the rest of the week, barring any negative headlines or more bad news on oil prices.

"I think we should be looking at another $10 billion week," he said. "Things looked good today, and people got stuff done."

Deutsche Telekom, Entergy, SoCalEd tighten after pricing

Most of the day's new issues were seen tightening at least a couple of basis points in the secondary market after pricing.

A source said the Deutsche Telekom issue was seen about 2 to 3 bps tighter on the bid side.

The 5.875% five-year notes were trading at 263 bps bid, 258 bps offered after pricing at 265 bps, while the 6.75% 10-year notes were at 273 bps bid, 263 bps offered after pricing at 275 bps.

Entergy Louisiana's 6.5% 10-year notes were slightly tighter at 247 bps bid, 243 bps offered from 248 bps pricing.

The 5.5% 10-year notes from Southern California Edison were seen tighter at 153 bps bid, 150 bps offered from 155 bps pricing.

Recent Caterpillar, CME notes tighten

Traders said Monday that last week's issues from Caterpillar Financial Services Corp. and CME Group Inc. were both trading tighter in the secondary.

Caterpillar Financial's 4.9% five-year notes were seen tightening considerably to 160 bps from 175 bps at pricing on Thursday. They had finished Friday at 170 bps bid, 167 bps offered.

The 5.4% five-year notes from CME Group were moderately tighter at 220 bps bid, 217 bps offered Monday morning from 225 bps pricing, also Thursday.

Trading volume increases with new issues

The secondary market had an uptick in activity Monday as a steady stream of new issues priced in the primary market.

"We weren't watching one particular thing, but things were a little bit busier," a market source said. "The general flow increased."

One trader said he saw levels on one company that announced earnings - food services company Sysco Corp. - but didn't know whether the bonds had tightened or widened.

The company's 5.5% notes due 2016 were at 133 bps bid, 138 bps offered mid afternoon.

Two of Deutsche Telekom's outstanding bonds were seen topping the list of trading volume late afternoon on Monday.

These were the company's 5.75% notes due 2016 and the 8.75% due 2030.

Energy Transfer Partners LP was the day's biggest mover, with its outstanding 6.125% bonds due 2017 seen tightening more than 10 bps.

This was after the company reported a first fiscal quarter revenues of $1.63 billion, up from $1.39 billion from the same time last year.

This was a record for the company after it expanded its natural gas processing.

Overall Monday was seen ending with more decliners than advancers.

Those losing numbered 1,259, while 1,137 advanced. Issues traded totaled 2,680, with 60 seen unchanged.

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