Whirlpool, Diamond Offshore, EnCana, Florida Gas, Goldman Sachs price; new deals price cheap

By Andrea Heisinger

New York, April 29 - A healthy dose of new issues hit the high-grade market Wednesday with sales from Whirlpool Corp., Diamond Offshore Drilling, Inc., EnCana Corp., Florida Gas Transmission Co., LLC and Mubadala Development Co. PJSC.

On the financial side, Goldman Sachs Group Inc. sold its second issue not backed by the Federal Deposit Insurance Corp. this year. The move was not all that surprising, a syndicate source said.

Some issues were strategically priced before or after an afternoon announcement from the Federal Reserve, which met Wednesday. A key interest rate was left unchanged.

Nokia Corp. was one of these companies, announcing a note offering after the Fed news came out.

The secondary was busy, with most issues tightening sharply after selling. Most of the day's non-financial issues came in 20 basis points or more after pricing, and two deals from Tuesday continued to make sizable gains, a trader said. This was mostly due to pricing decisions.

Spreads were generally tighter by late afternoon as Treasury yields were noticeably wider. Both the five- and 10-year notes were 10 bps wider, with the 10 year at 3.11%. The 30-year bond was 6 bps wider to yield 4.02%.

Goldman Sachs sells non-FDIC notes

For the second time this year, Goldman Sachs Group has sold a sizable offering of notes without the backing of the FDIC.

The $2 billion of 6% five-year notes priced to yield Treasuries plus 410 bps. This was at the tight end of guidance that was in the 412.5 bps area, a source close to the sale said.

The issue was a self-led deal by Goldman Sachs & Co. The financial services company is based in New York City.

This is the third deal done by a financial name in 2009 without the backing of the FDIC. Goldman broke into the market on Jan. 29, selling $2 billion 7.5% notes due 2019 at Treasuries plus 500 bps.

JPMorgan Chase & Co. surprised some earlier in April by announcing and selling $3 billion of notes due 2019 at Treasuries plus 350 bps. It happened on the day of the company's first-quarter earnings announcement.

One source said Wednesday that the latest issue from Goldman may signal a shift ahead.

"A lot of these [financial names] have already done a bunch of FDIC [issues]," he said. "I think they're testing things out to see at what levels they get done. It's probably a good thing."

Many of the large financials are coming out of earnings blackouts but are also awaiting the public airing of government stress test results on May 4.

Syndicate sources have said the light issuance in the past few weeks was partly due to companies and investors waiting to see what happened with the stress test announcements.

"It should be interesting," one source said.

EnCana sells $500 million

Canadian natural gas and crude oil exploration company EnCana sold $500 million of 6.5% 10-year notes.

The notes priced at Treasuries plus 350 bps, with Banc of America Securities LLC and Deutsche Bank Securities Inc. as bookrunners.

The company is based in Calgary, Alta.

A source close to the deal said price guidance was originally in the 400 bps area but was then scrapped in favor of the mid-300s bps range.

This was due to a high investor interest leading to the deal being several times oversubscribed, he said.

The sale was also intentionally priced prior to any announcement out of the day's Fed meeting, he said.

Diamond Offshore offers 10 years

Houston-based Diamond Offshore Drilling sold $500 million of 5.875% 10-year senior notes early Wednesday. It was one of the first deals to price, a source said.

The notes sold at Treasuries plus 287.5 bps.

Goldman Sachs and J.P. Morgan Securities Inc. were bookrunners.

The offshore oil and gas drilling contractor is based in Houston.

Whirlpool sells two tranches

Appliance company Whirlpool priced $850 million of notes in two tranches. The 8% three-year notes priced at Treasuries plus 662.5 bps, with the $500 million of 8.6% five-year notes also pricing at Treasuries plus 662.5 bps.

They priced, and were trading, at a dollar level, a source said.

The deal was massively oversubscribed, a market source said.

The company is based in Benton Harbor, Mich., and tapped Citigroup Global Markets Inc. and JPMorgan as bookrunners.

Abu-Dhabi firm prices $1.75 billion

Mubadala Development priced $1.75 billion senior unsecured five- and 10-year bonds, a market source said.

The $1.25 billion 5.25% five-year bonds priced to yield Treasuries plus 395 bps.

The $500 million 7.625% 10-year bonds priced to yield Treasuries plus 462.5 bps.

Citigroup, Goldman Sachs and RBS Securities Inc. were bookrunners for the Rule 144A and Regulation S deal.

The bonds will come from a global medium-term note program Mubadala announced on April 20.

Proceeds will be used for general corporate purposes.

Mubadala Development is an Abu Dhabi-based holding company.

Nokia plans note sale

Mobile device maker Nokia announced in a 424B2 filing with the Securities and Exchange Commission late Wednesday that it plans to issue notes.

The announcement came after the conclusion of a Fed meeting, which a source away from the deal said was the reason for its delay.

As a result, it's become Thursday's business.

Bookrunners are Banc of America Securities LLC, Barclays Capital Inc., Credit Suisse and JPMorgan.

Florida Gas prices upsized deal

Natural gas pipeline operator Florida Gas Transmission sold an upsized $600 million 7.9% 10-year notes at Treasuries plus 490 bps. The sale was done under Rule 144A.

A source said the size was originally $500 million.

Banc of America Securities, Calyon, Goldman Sachs and JPMorgan were bookrunners.

The company is based in Houston.

Diamond Offshore 2019 in nicely

The new 5.875% bond due 2019 from Diamond Offshore Drilling followed the trend Wednesday and was trading nicely tighter than its price, a trader said.

The notes priced at Treasuries plus 287.5 bps and were quoted at 262 bps bid, 255 bps offered, he said.

EnCana tightens 40 bps

EnCana's new 6.5% bonds due 2019 were about 40 bps tighter in the secondary, a trader said. They priced at Treasuries plus 350 bps and were quoted at 311 bps bid, 307 bps offered.

Whirlpool up in trading

Whirlpool's two tranches of notes priced Wednesday were doing well soon after trading, a secondary source said.

The 8% bonds due 2012 were priced at 99.889 and were quoted at 100.625 bid, 101.25 offered.

The 8.6% due 2014 were sold at 99.95 and were quoted at 101 bid, 101.5 offered.

ITT bonds make gains

The recent issue of five- and 10-year bonds from ITT Corp. were doing well in trading Wednesday, a trader said.

The 4.9% bonds due 2014 were quoted at 270 bps offered, which is in from the Treasuries plus 300 bps price.

The 6.125% bonds due 2019 were sold at Treasuries plus 312.5 bps and quoted at 278 bps bid, 262 bps offered.

Potash bonds in sharply

One of the biggest tightening moves of the day came from the two-tranche sale from Potash Corp. of Saskatchewan Inc.

A trader said the 5.25% bonds due 2014 were at 270 bps offered after pricing at Treasuries plus 337.5 bps.

The 6.5% bonds due 2019 were sold at Treasuries plus 350 bps and trading nearly 60 bps tighter at 290 bps offered.

Big moves linked to pricing

Deals priced Tuesday and Wednesday made some noticeably big moves inward by late afternoon. Most of the non-financial offerings were more than 20 bps tighter.

A trader in this sector said they "priced too cheap."

Sales in recent weeks have mostly tightened, but only modestly.

Bank, broker CDS tighten

Bank and broker credit-default swaps were universally tighter late Wednesday, a trader said.

Bank names were 15 to 30 bps tighter, he said, with Citigroup at the far end of the spectrum at 30 bps better.

Brokers were 20 to 30 bps tighter. Merrill Lynch was at the 30 bps end of the margin, the trader said.

Altria Group tops trading

A bond from Altria Group Inc. was at the top of high-grade trading early Wednesday afternoon, a market source said.

The 10.2% bonds due 2039 were the most traded. Altria has had some of the top-traded notes since it announced positive first-quarter earnings on April 22, despite showing a decline in profit from the previous year.

UST, Xerox big movers

Xerox Corp. and Altria Group subsidiary UST had two of the bonds that moved the most late Wednesday, a market source said.

Xerox announced earnings that met expectations on April 24, and as a result their 5.5% bond due 2012 was more than 85 bps tighter than a week ago.

UST's 5.75% bond due 2018 was nearly 25 bps wider than the previous week. Also nearly 25 bps wider was a 9.125% bond due 2013 from Time Warner Inc. The company announced that due to falling revenue, it may spin off internet subsidiary AOL.

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