AmEx Credit launches InterNotes, Toyota Motor Credit prices floaters; secondary light on volume

By Andrea Heisinger

New York, Aug. 25 - A new issue from Toyota Motor Credit Corp. was about the extent of what went into the investment-grade bond market Monday.

Other news came from American Express Credit Corp., which announced its launching of an InterNotes program.

The secondary market was decidedly quiet, with sources reporting very light trading.

With no big names reporting earnings in the first part of the week, secondary sources said they were holding out for a return to normal pace after Labor Day.

Toyota Motor Credit prices floaters

The U.S. financing arm of Toyota priced $125 million one-year floating-rate notes Monday.

The medium-term notes priced at par to yield Federal Funds plus 50 basis points.

The agent was J.P. Morgan Securities Inc.

AmEx launches InterNotes

American Express Credit announced Monday that it has launched an InterNotes program.

The company made its first filing late Monday afternoon, for 6.05% three-year notes and 6.9% seven-year notes.

A company spokesperson, Joanna Lambert, confirmed that it is a new debt product, and said it complements the company's funding plan.

It also gives the company access to more avenues of funding.

Banc of America Securities LLC and Incapital LLC are listed on a 424B3 Securities and Exchange Commission filing as the lead managers and agents. Other agents will also be used.

According to the prospectus, proceeds from the notes will be added to general funds and used for financing operations including the purchase of receivables, repayment of short-term debt and investment in short- and medium-term financial assets.

The InterNotes will be sold to retail investors, generally at par in $1,000 increments.

Bad financial news piles up

Negative news about prominent financial names continued to pile up Monday, although with little in the way of new issues, it was difficult to tell what effect it had.

"It's just piling one piece of bad news on top of another," a source said.

American International Group was again in the news, and not for anything good.

The insurance company is predicted to have a $6.5 billion write down in the third quarter, according to analysts from Credit Suisse. This is far above AIG's loss estimate of $2.6 billion.

Credit rating company Fitch also put AIG on watch for a downgrade.

Also in the news was Lehman Brothers.

The troubled investment bank is rumored to be on the radar of Korea Development Bank for a possible buyout.

Many companies are looking toward September for new issues, although some are contemplating the merits of pricing this week.

"Today marks a point in time when they [issuers] are making decisions to go in September or get it done in August," a source said.

"Again, it's more of a question of whether the market is going to get better."

Whether a company will issue is again a day-to-day call, and there is nothing permanently on the schedule for the rest of this week, sources said.

But there are a handful of issuers watching the market, in case a window opens.

Secondary sees low volume

The secondary was so quiet Monday it "is like a ghost town," according to one source.

"There's hardly any trading going on," he said. "Really, there's hardly anything going on. Everyone's done for the week."

There wasn't much to monitor for levels, given the light volume and lack of new issues.

AIG's outstanding bonds "seem weaker," a source said, but couldn't give definitive levels or changes in the face of the earnings predictions.

"It's very thin out there," the source said. "It's hard to tell [levels]."

There was no visible move on Lehman Brothers bonds on the buyout talk, he said.

Bank CDS swaps widen slightly

Credit-default swaps for major banks were 3 to 5 bps wider Monday afternoon, a trader said.

Washington Mutual Inc.'s debt protection cost was seen 20 bps wider, with an upfront percentage of 22.75% to 23.75%, plus 500 bps annually.

Banks in general were wider on continued woes in the financial sector, coupled with the weekend collapse of Kansas' Columbian Bank & Trust Co.

Major brokerage CDS costs were 5 to 15 bps wider.

Lehman Brothers was seen 5 bps wider at 350 bps bid, 365 bps offered.

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