JPMorgan Chase sells non-FDIC notes, StatoilHydro prices; JPMorgan bond firms, others steady

By Andrea Heisinger

New York, April 16 - The excitement in the high-grade bond market Thursday came in the form of a note placement by JPMorgan Chase & Co., which opted to price the issue without the guarantee of the Federal Deposit Insurance Corp.

Meanwhile, sales from Norway's StatoilHydro ASA and the Industrial Bank of Korea were also completed.

JPMorgan announced its offering and priced it in short order. The company was taking advantage of a positive earnings announcement earlier in the day, a syndicate source said.

"It's a good sign," he said.

In the secondary market, the JPMorgan notes were seen immediately tightening 10 basis points or more, a trader said. The company's other outstanding bonds didn't fare as well and weren't seen coming in, he said.

Spreads were tighter by late afternoon as Treasury yields widened from the previous day. The Treasury five-year note was up 7 bps to yield 1.77% while the 30-year bond was 5 bps wider to yield 3.71%.

JPMorgan sells non-FDIC deal

In a surprise move Thursday, JPMorgan Chase sold $3 billion of 6.3% 10-year bonds at Treasuries plus 350 bps. It was done without the backing of the FDIC and was the first such sale the company has done since August of 2008.

J.P. Morgan Securities Inc. ran the sale.

Prior to this, Goldman Sachs Group Inc. was the only financial name to issue notes without the FDIC guarantee, pricing $2 billion 7.5% 10-year notes on Jan. 29 at Treasuries plus 500 bps.

At the time, it was a test of the market to see at what level it would get done and how successful it would be.

JPMorgan Chase is a financial services company based in New York City.

The deal was launched in the afternoon and sold soon after. They are using proceeds for general corporate purposes.

The sale followed an earnings announcement from JPMorgan earlier in the day, where a $2.1 billion profit for the first quarter of the year was unveiled.

StatoilHydro prices $2 billion

Norway's StatoilHydro sold $2 billion of unsecured notes in two tranches. The deal was originally announced as a single tranche of 10-year notes, with a five-year tranche added later.

The $500 million of 3.875% five-year notes priced to yield Treasuries plus 220 bps.

The $1.5 billion of 5.25% 10-year notes priced at Treasuries plus 245 bps.

An informed source said he did not know how much investor interest there was.

The company is using proceeds for purposes including working capital, repayment of debt or financing of acquisitions.

Banc of America Securities LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were bookrunners.

The international energy company for upstream oil and gas operations is based in Stavanger, Norway.

Korean bank sells five year

The Industrial Bank of Korea sold $1 billion of 7.125% five-year bonds at mid-swaps plus 556.6 bps.

Bookrunners for the Rule 144A, Regulation S deal were Barclays Capital, Citigroup, Merrill Lynch and Morgan Stanley & Co.

JPMorgan deal boosts market

The primary market got a surprise Thursday afternoon as JPMorgan launched and priced a $3 billion offering of 10-year notes after its earnings announcement. The surprise was it wasn't backed by the FDIC, making it the first such sale from a financial sector issuer since January.

"I think a few people had an idea they might [issue]," a market source said. "It was kind of surprising they did it without the [FDIC] backing. I guess Goldman was surprising too."

It's not impossible that other financials will issue similar deals once they come out of earnings blackout, the source said.

Much like the Goldman deal, this could have been a test for the market.

"I think they just wanted to throw it out there and see what happened," he said. The JPMorgan sale priced considerably tighter than the similar Goldman deal three months earlier.

Statoil 10 year in 20 bps

The new 5.25% bond due 2019 from StatoilHydro came in about 20 bps in the secondary market after pricing at 245 bps over Treasuries, a trader said.

The bond was at 225 bps bid, 220 bps offered. There was no level available for the bond due 2014 from the issue, he said.

Plains All American bond holds gains

The 8.75% bond due 2019 from Plains All American Pipeline, LP held its gains made after pricing Wednesday, a trader said.

The bond priced at Treasuries plus 592.7 bps and was quoted at 569 bps bid, 566 bps offered late Thursday. They were at 567 bps bid, 565 bps offered on Wednesday.

Emerson Electric loses ground

A three-tranche deal from Emerson Electric Co. that priced earlier in the week lost some of its gains Thursday from where it stood Wednesday, a trader said.

The 4.125% notes due 2015 were at 228 bps bid, remaining in from its Treasuries plus 245 bps price, but slightly wider than the 225 bps bid, 220 bps offered level of Wednesday.

The 5% notes due 2019 were at 217 bps bid - better than its 233 bps over Treasuries price, but out from the 216 bps bid, 213 bps offered of the day before.

The 6.125% notes due 2039 were at 232 bps bid, remaining well in from the 250 bps over Treasuries price. The level was unchanged from the previous day.

Toll Brothers bond climbs

A recent split-rated issue of 8.9% bonds due 2017 from Toll Brothers Finance Corp. moved up in the secondary on Thursday, a trader said. They were trading at 99.25 after being at 98.75 Wednesday. They priced at 97.975.

JPMorgan bond tightens

The new 6.3% bond due 2019 from JPMorgan Chase was about 10 bps tighter soon after pricing, a trader said.

It priced at Treasuries plus 350 bps and came in to 340 bps bid, 337 bps offered.

Other outstanding bonds from the company were not seen tighter, the trader said, despite the positive earnings announcement and bond offering.

Financials most traded

Several financial names were among the most popular bonds early Thursday afternoon, a market source said.

A non-FDIC-backed 7.5% bond due 2019 from Goldman Sachs was the most traded. It follows on the heels of the JPMorgan issue Thursday, and also of positive earnings announced earlier in the week.

JPMorgan Chase and Bank of America NA also had notes selling at high volume.

Both of these were also older, non-FDIC guaranteed deals. JPMorgan's was a 6% bond due 2018, while Bank of America's 5.65% bank notes due 2018 were popular.

Bank, broker CDS tighten

Bank and broker credit-default swaps were each tighter late Thursday, a trader said.

Bank names were 5 to 30 bps tighter, while brokers were 5 to 15 bps tighter, they said.

DuPont, Hartford top movers

Bonds from Hartford Financial Services Corp. and E.I. DuPont de Nemours & Co. had some of the day's top moving bonds by late Thursday.

It was the second day a bond from Hartford was one of the top bonds tightening. The company announced it was named one of the World's Most Ethical Companies for the second year in a row by the Ethisphere Institute, according to a press release.

DuPont moved the other direction, with its 4.75% note due 2015 widening nearly 25 bps. It was announced the previous day that salaried workers at the company were being asked to take two weeks unpaid leave to cut costs.

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