NIBC Bank, FMC sell notes on neutral tone, MF Global plans deal; spreads ease; FMC strong

By Andrea Heisinger and Paul Deckelman

New York, Nov. 24 - NIBC Bank NV and FMC Corp. both brought deals to the high-grade bond market on Tuesday ahead of the long holiday weekend.

MF Global Ltd. announced a sale, but it had apparently not priced as of late afternoon.

NIBC Bank brought the largest sale of the day, totaling $3 billion in two tranches. It was split between tranches of five-year fixed-rate notes and five-year floating-rate notes.

Chemical company FMC sold $300 million of 10-year notes early in the day. Both this sale and NIBC were sold well before mid-afternoon.

MF Global is expected to price $250 million of 10-year notes.

The primary tone remained neutral, a source said, and is expected to for what's left of the week.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 13 North American high-grade index was unchanged at a mid bid-asked spread level of 102 bps, after having tightened by 1 bp on Monday.

Advancing issues jumped ahead of decliners by a nearly three-to-two edge.

Overall market activity, reflected in dollar-volume totals, rose by 5% from Monday's pace.

Spreads in general were seen a bit wider, in line with modest decline in Treasury yields; for instance, the yield on the benchmark 10-year note fell by 5 bps on Tuesday to 3.30%

Among specific issues, the new FMC Corp. bonds were seen having firmed solidly from the spread over comparable Treasuries at which that paper had priced earlier in Tuesday's session.

On the other hand, Aegon NV's new issue - the sole deal to have priced on Monday - widened out markedly from its spread at pricing.

With a fall off in new-deal activity from the frenetic pace seen the previous few sessions, investors looked to established bonds, particularly Cisco Systems Inc., which saw active trading in several of its recent issues.

FMC sells 10-year notes early

Diversified chemical company FMC sold $300 million of 5.2% 10-year senior unsecured notes at 190 bps over Treasuries.

Price talk was initially whispered in the 200 to 215 bps range, an informed source said. The sale was launched in the 200 bps area, and then came in further to price, he said. There was about $2.5 billion on the books.

"It was a great trade," the source said. "We were in and out quickly this morning."

Bookrunners were Bank of America Merrill Lynch and Citigroup Global Markets.

Proceeds will be used by the Philadelphia-based company to pay down existing debt under a revolving credit facility and for general corporate purposes.

NIBC Bank prices $3 billion

Netherlands-based NIBC Bank sold $3 billion of notes backed by that country's government in two tranches, an informed source said.

A $1 billion tranche of five-year floating-rate notes priced at par to yield three-month Libor plus 38 bps. There was guidance of the Libor plus 40 bps area, the source said. The tranche priced at the tight end of that.

The $2 billion tranche of 2.8% five-year notes priced a spread of mid-swaps plus 38 bps. They were talked at the mid-swaps plus 40 bps area, and also priced at the tight end of that.

The notes were sold under Rule 144A.

There was about $5 billion of demand for the deal, the informed source said.

"There wasn't as much on the books because it was a government-backed deal," he said.

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

The bank is based in Den Haag, the Netherlands.

Market slows for holiday

The new issue market is expected to have little to no activity until the coming week, as companies and syndicate desks thin out for the Thanksgiving holiday break.

"Things were pretty neutral today, and I think they will be [Wednesday]," the source said.

There is little on the new deal calendar for the remaining two days that deals could come to market this week.

"I don't really know of anything," the source said. "I think everyone's just coasting until Monday."

MF Global plans 10-year sale

MF Global announced a $250 million sale of 10-year senior unsecured notes in the morning, according to a 424B5 filing with the Securities and Exchange Commission.

Pricing could not be confirmed at press time. A call to the bookrunner yielded a "no comment" in regard to whether the deal had priced, or when it would. Other market sources said they hadn't seen it price.

J.P. Morgan Securities is running the books.

Proceeds will go to repay outstanding debt under a liquidity facility and for general corporate purposes.

The issuer provides execution and clearing for the cash and derivatives markets and is based in New York City.

FMC firms nicely after pricing

When the new FMC 5.20% notes due 2019 were freed for secondary dealings, a trader saw the $300 million issue having "come in nicely" from the 190 bps over level at which they had priced earlier.

"Wow," the trader said, noting that the FMCs were being offering at 176 bps - and then later on, were seen trading around at 179 bps bid, 174 bps offered.

Aegon issue is much wider

But while FMC was sizzling, Ageon NV was fizzling, with the $500 million offering of 4.625% notes due 2015 having widened out to 270 bps bid, 260 bps offered - far wide of the 250 bps spread at which the Dutch insurance company's paper had priced on Monday.

Later on, the trader heard them offered at a still-swollen 257 bps over.

Cisco a market favorite

Among the established issues, Cisco Systems remained a top choice, with the San Jose, Calif.-based networking technology company's recent 5.50% bonds due 2040 topping Tuesday's most actives list, with some $88 million changing hands.

Cisco, said the trader "has been pretty consistent, in the Top Five" among the volume leaders "almost every day," although the company's 30-year bonds, while busily traded Tuesday, were not much changed from the 130 bps context at which that $2 billion of paper had priced back on Nov. 9.

In Tuesday's dealings, it was quoted around 135 bps over on the bid side and a tight 134 bps offered.

The trader further saw Cisco's 4.45% notes due 2020 offered at 101 bps - again, not far from the 100 bps over level at which the $2.5 billion tranche of bonds had priced on Nov. 9.

Bank CDS levels widen out

A trader who watches the credit-default swaps market said that the cost of insuring holders of major bank paper against a possible event of default widened out between 1 bps and 4 bps on the day, while CDS costs for big brokerage paper were about 5 bps wider across the board.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.