Primary seen dull on early market shutdown; Cox Communications bonds gain, Marathon Oil mixed

By Andrea Heisinger

New York, Feb. 13 - An early market close Friday meant no new deals to speak of in the investment-grade primary market. It's expected the coming week will make up for the quiet session.

About $12.5 billion in offerings were sold in the Feb. 9 week, mostly from a variety of corporate issuers. This mix of names is also expected to continue.

The secondary was quiet, with the corporate side continuing to mop up supply from previous weeks. Recent bonds from Cox Communications Inc. continued their gains, while those from Marathon Oil Corp. were mixed in trading.

End of February seen busy

A primary market source said the end of February is looking busy in general.

He could not say which companies were planning to issue, and much of it hasn't been completely mapped out.

"There are no dates firm on the calendar," he said. "It will be more corporate [names] than financial."

He was unsure whether any financial or banking names were planning to issue new debt under the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

"I don't think a lot of them know," he said. Earnings season is mostly finished, with many companies and financials already issuing after their blackout was over in the first part of the month.

"I don't know if it's even that," he said, referring to companies waiting to issue. "I think they're just being cautious, and since it's a long weekend, they're waiting for market tone [Tuesday]."

There are other motives for the companies to come to the debt market, he said, "mainly funding needs."

Although who's issuing in the coming week is unclear, it "should be a busy one," he said.

"I just hope they're not all piled into the same day," the source said. "It would be nice if they would be spread out a little bit."

Bank bonds in slightly

Banking names were seen "a little tighter" early Friday, a trader said.

The day was "very quiet" on the financial side of the secondary market, he said.

The non-financial half was busier, with recent deals continuing to be active and desks thinning out ahead of the long weekend.

Cox bonds tighten further

The new 8.375% bonds from Cox Communications were seen continuing gains Friday after pricing Thursday.

A trader said they were at 475 bps, in from the 490 bps over Treasuries price. This was in from the level seen soon after pricing Thursday of 485 bps bid, 480 bps offered.

Cox is an Atlanta-based cable television and telephone services company.

Marathon Oil seen mixed

A recent two-tranche issue from Houston-based Marathon Oil was mixed early Friday afternoon, with one tranche continuing to gain and the other losing ground from Thursday's levels.

The 6.5% bonds due 2014 were at 450 bps bid, a trader said, which was about 5 bps wider than the previous day's level. It is still tighter than the 487.5 bps over Treasuries initial price.

The 7.5% bonds due 2019 gained slightly from Thursday's level, selling at 463 bps offered. This is down a few basis points from Thursday's level but still significantly better than the 487.5 bps price Wednesday.

Corporate trading busy

Friday morning was busy in the non-financial sector of the secondary, a trader said.

A financial trader reported it was "very quiet" and saw no real movement to speak of other than a slight tightening in bank names' bonds.

It was a trend that mirrored the recent take-back of the primary market that was for a short period dominated by issues backed by the FDIC.

The busy conditions Friday didn't have much to do with new issue volume.

"It was not a lot to do with new issuance," a secondary source said. "For the most part, our dealing with the street was limited [today]."

The open was weaker, and companies mostly stayed away from the high-grade market, he said.

"Most of the stuff we were dealing with was internal."

Cisco tops trading list

A recent issue of 5.9% bonds due 2039 from Cisco Systems Inc. was seen at the top of the high-grade trading list early afternoon Friday.

The bonds priced Monday, and the Cisco issue as a whole struggled in the secondary throughout the week, barely making gains, and in some of the five-, 10- and 30-year tranches, widening.

The tranche due 2039 was seen doing the worst. By Thursday, the bonds had widened to 245 bps bid, 240 bps offered, which was about 20 bps worse than the Monday price of 225 bps over Treasuries.

This issue topped a list heavy on financial and banking names.

Taking the No. 2 spot was an issue of FDIC-backed bonds from Goldman Sachs Group Inc.

The bank holding company's 1.625% bonds due 2011 were trading at high volume.

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