StatoilHydro, Protective Life sell bonds, issuance slows to trickle; StatoilHydro tightens

By Andrea Heisinger and Paul Deckelman

New York, Oct. 7 - StatoilHydro ASA and Protective Life Corp. sold bonds on Wednesday, in a primary market otherwise devoid of activity.

It was also likely the last day any substantial new deals will get done in the investment-grade bond market, sources said. There is "basically nothing left" on the calendar for the remainder of the week before a long holiday weekend.

StatoilHydro sold $900 million of five-year notes at the tightest end of talk, a source said.

Protective Life sold $100 million of 15-year senior notes. It was a follow-up to the previous day's $700 million sale in two tranches by the financial and insurance products company.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 13 North American high-grade index was unchanged at a mid bid-asked spread level of 103 bps.

Advancing moved back ahead of decliners Wednesday, leading them by a seven-to-five margin.

Overall market activity, reflected in dollar-volume totals, fell 6% from Tuesday's busy pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year notes narrowed by 7 bps on Wednesday to 3.18%.

There was brisk activity seen in the new Protective Life Corp. bonds, although a trader said that real quotes in the issue were hard to come by.

Norway's StatoilHydro bonds were seen having tightened modestly.

Overall, a trader said that there was "a lot of activity, and a lot of flow" during Wednesday's session, particularly in the morning.

In the afternoon, "it seemed like things kind of died down a little bit."

One possible suggestion was the fact that some people made an early getaway once the afternoon had come to go down to Florida for the annual Raymond James Bond Outing, held the weekend before Monday's Columbus Day holiday, when the U.S. fixed-income markets will be closed. "A lot of people left this afternoon to go down there, because much of the action in that outing is on Thursday and Friday."

The trader theorized that activity may be lighter on Thursday and Friday with "a lot of the dealer desks lightly staffed, or staffed by the second-in-command," as the big boys bask in the warm Florida sun for what essentially amounts to a five-day weekend of golf, sailing and other fun and games, with some business networking thrown in for good measure.

StatoilHydro offers $900 million

Norwegian oil and gas company StatoilHydro sold $900 million of 2.9% five-year senior notes at Treasuries plus 75 bps, a market source said.

They came in at the tight end of price guidance that was initially in the "low 80s," a source close to the deal said, referring to basis points. Official talk was 75 to 80 bps.

The deal was roughly three times oversubscribed, with about $3 billion on the books, he said.

Bank of America Merrill Lynch, Citigroup Global Markets, J.P. Morgan Securities and Morgan Stanley were bookrunners.

The issuer is based in Stavanger, Norway.

Protective Life sells small deal

Protective Life sold $100 million of 8% 15-year senior notes at par of $20, according to an FWP filing with the Securities and Exchange Commission. Bank of America Merrill Lynch and Wells Fargo Securities ran the books.

The deal followed the financial and insurance products company's sale of $700 million notes in 10- and 30-year tranches on Tuesday.

Proceeds are going to purchase newly issued surplus notes by the company's indirect insurance subsidiary Golden Gate Captive Insurance Co.

The company is based in Birmingham, Ala.

Deals remain oversubscribed

A source close to the StatoilHydro issue described it as "definitely oversubscribed," with three times the issuance amount on the books.

This follows in the footsteps of sales from Tuesday that had even more investor interest.

"There wasn't much competition [today]," the source said of the StatoilHydro offering.

Another source said that "investors are looking for good paper," and that they found that in the StatoilHydro notes, which priced at a very respectable 75 bps over Treasuries.

Earnings season also unofficially kicked off after the market close on Wednesday with Alcoa announcing third-quarter numbers.

Others will be trickling out in the next couple of weeks.

"That will definitely slow things [down]," a market source said. "We should be strong [again] after that, though, through the end of the year, at least."

StatoilHydro trades better

When the new StatoilHydro five-year notes were freed for secondary action, a trader saw them bid at 69 bps over, versus the 75 bps over level at which the $900 million issue had priced. Later, the trader quoted the bonds offered at 62, but with no bid seen.

A second trader did see a two-sided market, at 67 bps bid, 63 bps offered.

RPM bonds also narrow

A trader said that RPM International Inc.'s $300 million of 6.125% notes due 2019 were being quoted at 279 bps bid, 274 bps offered early in the morning, "but not much after that."

At another shop, the bonds were seen at 279 bps bid, 277 bps offered at mid-afternoon. The Medina, Ohio-based specialty chemicals maker had priced $300 million of the bonds, upsized from $250 million originally, at 287.5 bps over, on Tuesday.

Protective Life trades around

One of the traders saw Protective Life's new 10-year and 30-year paper as "the most volume active investment grade name

"There was a ton of activity in them," both in round lots and in "tons" of odd-lots.

However, the trader said that despite that activity, "there were no real quotes" on them seen at that shop, although the $300 million of 8.45% bonds due 2039 were perhaps 1 bp tighter than the 437.5 bps at which they had priced Tuesday.

The Birmingham, Ala.-based insurer's $400 million of 7.375% notes due 2019 were heard about 10 bps wider than the 412.5 bps spread at Tuesday's pricing.

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