ConocoPhillips, Kellogg, Aflac, EOG, Principal, Beckman Coulter deals price; new bonds gain

By Andrea Heisinger

New York, May 18 - The recent trend of a busy start to the week held Monday as ConocoPhillips, Kellogg Co., Aflac Inc., Beckman Coulter, Inc., EOG Resources, Inc., Principal Financial Group Inc. and Central Maine Power Co. made their way to the investment-grade primary.

An offering of senior notes from State Street Corp. was also announced.

The few bonds that priced early in the day tightened nicely once they hit the secondary market. Kellogg, Beckman Coulter and EOG Resources all saw their bonds tighten.

On the financial side, the recent issue of notes from Citigroup Inc. that was priced without the guarantee of the Federal Deposit Insurance Corp. continued to gain in trading.

Spreads were significantly tighter in general as Treasury yields widened across the board. The 30-year bond was out 12 basis points to yield 4.2%, while the five-year note was 10 bps wider.

ConocoPhillips prices bonds late

Energy company ConocoPhillips sold an upsized $3 billion of notes in three tranches. A reopening of 30-year notes was added to the deal, a source close to it said.

The $1.5 billion of 4.6% notes due January 2015 priced to yield 250 bps over Treasuries, which was in line with guidance in the 250 bps area.

A $1 billion tranche of 6% notes due January 2020 priced at Treasuries plus 285 bps, which was also in line with guidance in the 285 bps area.

The third tranche was a reopening of 6.5% notes due 2039 to add $500 million. The notes priced at 287.5 bps over Treasuries. This was at the tight end of talk, which was 287.5 bps to 300 bps.

This issuance brings the total of the 2039 bonds to $2.75 billion, including $2.25 billion priced Jan. 29 at Treasuries plus 295 bps.

The sale was about two times oversubscribed at $6 billion, the source said. It was guaranteed by ConocoPhillips Co.

The issuer plans to use proceeds to reduce outstanding commercial paper.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBS Securities Inc. were bookrunners.

Aflac upsizes deal

Insurance provider Aflac sold an upsized $850 million of 8.5% 10-year senior notes. The size was increased from $500 million, a source close to the sale said.

The notes priced at Treasuries plus 530 bps, with proceeds being used to repay a loan from the company's primary life insurance subsidiary.

Goldman Sachs & Co. and J.P. Morgan Securities ran the books for the company, which is based in Columbus, Ga.

Kellogg sells seven-year notes

Cereal and convenience food company Kellogg priced $750 million of 4.45% seven-year notes early Monday at Treasuries plus 180 bps.

The size of the deal was quickly decided on, a source close to it said, and it was able to price quickly.

"It's a good name," he said. "We got a pretty good price, I think."

The company, based in Battle Creek, Mich., is using proceeds to repay a portion of commercial paper.

JPMorgan, Deutsche Bank Securities and HSBC Securities ran the books.

EOG prices $900 million

Houston-based EOG Resources sold $900 million 5.625% 10-year senior notes early Monday afternoon at 245 bps over Treasuries.

Plans are to use proceeds for purposes including the repayment of commercial paper.

The independent oil and gas company tapped Barclays Capital Inc., Deutsche Bank Securities and JPMorgan as bookrunners.

Beckman Coulter offers two tranches

Biomedical testing company Beckman Coulter sold $500 million of senior notes in two tranches early Monday.

The $250 million of 6% six-year notes priced at Treasuries plus 400 bps, while the $250 million of 7% 10-year notes priced at 387.5 bps over Treasuries.

The issuer is using proceeds to fund a portion of the acquisition of Olympus Diagnostic Systems.

Citigroup, JPMorgan and Morgan Stanley were bookrunners.

Principal Financial sells $750 million

Principal Financial Group priced $750 million senior notes in two tranches late Monday, according to a press release.

The deal consisted of $400 million of 7.875% five-year notes and $350 million of 8.875% 10-year notes. Further terms were not available at press time.

Proceeds are being used to repay in part or full $441 million of 8.2% unsecured notes due Aug. 15, 2009.

Citigroup, Credit Suisse and Deutsche Bank ran the books.

The deal from the savings, investment and insurance company, based in Des Moines, is guaranteed by Principal Financial Services, Inc.

State Street plans non-FDIC notes

State Street announced plans Monday to issue senior notes without the backing of the FDIC, according to a press release.

The deal from the Boston-based financial services holding company is being done concurrently with a common stock share sale.

Bookrunners are Goldman Sachs and Morgan Stanley.

Proceeds will be used to repurchase preferred and common stock warrants issued to the U.S. Department of the Treasury under the TARP Capital Purchase Program.

The company joins other recent issuers like Bank of New York Mellon Corp., JPMorgan Chase & Co., American Express Co., Citigroup and U.S. Bancorp in issuing bonds not backed by the FDIC. Most of these were also done to pay back TARP funds.

Central Maine Power sells $150 million

Electricity provider Central Maine Power sold $150 million of first mortgage bonds, a source close to the deal said late Monday.

The 5.7% 10-year bonds priced at 250 bps over Treasuries.

There was "nothing special" about the deal, the source said. "It was just some mortgage bonds," he added.

Bank of New York Mellon and Wachovia Capital Markets ran the books.

Active calendar for week

The first half of the week is set to be busy, sources said late Monday. The week started off busy, as is the new trend, and should feed into the next couple of days before an early market close Friday and a long holiday weekend.

"We should be pretty active," a syndicate source said, "in the first half of the week, at least."

The source added that "the tone was good" at the end of the day.

Another source called it a "good Monday," with most deals pricing at good levels.

"We should be busy again tomorrow," he said.

Hybrid bank deals popular on junk side

Split-rated hybrid deals from bank names are being heavily traded on the junk side of the market, a high-yield trader said late Monday. Earlier in the day, an 8.3% hybrid preferred (Baa3/CC) due 2057 from Citigroup Inc. was the most traded in the high-yield secondary. There was $25 million of the bond traded throughout the day, he said.

"Especially when things seem oversold and people are jumping back in," he said, "it's a good time to look at the bottom of the cap structure, if you're comfortable with the parent. You'll get the most bang for the buck that way."

Kellogg bond in 15 bps

The new 4.45% bond due 2016 from Kellogg was trading 15 bps tighter at 165 bps bid soon after pricing at 180 bps over Treasuries, a market source said. Later in the day, a trader said they had lost some gains and were quoted at 168 bps bid, 162 bps offered.

Beckman Coulter 10 year tightens

The new 7% bond due 2019 from biomedical technology company Beckman Coulter tightened nicely by late afternoon, a trader said. The bond priced at 387.5 bps over Treasuries and was at 375 bps bid, 360 bps offered in the secondary.

The 6% note due 2015 that made up the second half of the issue was not seen trading, he said.

EOG 10 year makes gains

EOG Resources' new 5.625% bond due 2019 was trading 15 to 20 bps tighter after pricing at Treasuries plus 245 bps early in the afternoon, a trader said.

The bond was quoted at 230 bps bid, 225 bps offered.

Citigroup issue tightens sharply

An issue of notes from Citigroup done Friday without the guarantee of the FDIC was significantly tighter in trading early Monday afternoon, a market source said.

The 8.5% 10-year notes priced at 562.5 bps and were at 525 bps bid, 510 bps offered. This is a further gain from the 535 bps offered level from late Friday after pricing. Later in the afternoon a trader said the bond was at 523 bps bid, 517 bps offered, furthering its gains from earlier in the day.

Bank names top trading

JPMorgan Chase had two of the top-traded bonds early Monday afternoon, while Bank of America Corp. also had a popular outstanding note, a market source said.

JPMorgan's 6.3% due 2019 and 4.65% due 2014, both done without an FDIC guarantee, were at or near the top of investment-grade bond trading.

Bank of America's 7.375% due 2014 was also heavily traded.

Bank, broker CDS costs come in

Credit-default swaps for bank and broker names were 5 to 10 bps tighter late Monday afternoon, a trader said.

Citigroup, AmEx top movers

Bonds from Citigroup and American Express Credit were among the day's biggest movers by late afternoon, a source said.

A 5.5% bond due 2013 from Citi was more than 50 bps tighter than the previous week. The company sold an issue of bonds Friday that was not backed by the FDIC, and the bonds were significantly tighter in trading Monday.

American Express' 7.3% bond due 2013 was about 45 bps wider than a week ago as news came out that parent company American Express Co. plans to eliminate 4,000 jobs.

The financial services company issued bonds recently in an effort to repay TARP funds.

Paul Deckelman contributed to this story

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