Duke Energy, Spectra Energy, Procter & Gamble bring quick bond sales; AmEx tighter in trading

By Andrea Heisinger and Paul Deckelman

New York, Aug. 25 - The number of new deals spiked slightly Tuesday from the previous lackluster day, with Spectra Energy Capital, LLC, Duke Energy Corp. and Procter & Gamble Co. selling bonds.

Spectra Energy's sale of $300 million in bonds due 2020 and Duke Energy's two-tranche sale of an upsized $1 billion were done by early afternoon. Neither of the issues went out with official price talk, a source close to them said.

Procter & Gamble's $1.5 billion issue of notes in two- and six-year tranches was the last to price for the day. Both of the tranches came in at the tight end of price guidance, a source who worked on the deal said.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 12 North American high-grade index was unchanged at a mid bid-asked spread level of 115 basis points.

Advancing issues - which surged back ahead of decliners Monday, by a better-than nine-to-seven margin - remained in front on Tuesday, leading by a four-to-three ratio.

Overall market activity, reflected in dollar-volume totals, rose almost 26% from Monday's pace.

Spreads in general were seen mostly wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note fell by 4 bps on Tuesday to 3.44%.

The recently priced American Express Credit Corp. issue was seen by traders continuing to tighten from the levels at which it priced last week.

Procter & Gamble upsizes

Procter & Gamble and Procter & Gamble International Funding sold $1.5 billion of notes in two tranches.

The size was increased from $1 billion, a source said.

The $1 billion of 1.35% two-year notes from Procter & Gamble International priced at a spread of Treasuries plus 38 bps. This tranche is guaranteed by parent company Procter & Gamble Co.

The two-year notes came at the tight end of price talk for a spread of 38 bps, plus or minus 2 bps, an informed source said.

A $500 million tranche of 3.15% six-year notes sold by parent Procter & Gamble priced at Treasuries plus 75 bps.

The notes came at the tight end of guidance of 75 to 80 bps.

Goldman Sachs & Co., J.P. Morgan Securities and Morgan Stanley & Co. were bookrunners.

The consumer products company is based in Cincinnati, Ohio.

Duke Energy offers two tranches

Electric company Duke Energy sold an upsized $1 billion of senior notes in two tranches early in the day.

The size was increased from $800 million, a source close to the deal said.

A $500 million tranche of 3.95% five-year notes priced at Treasuries plus 145 bps.

The $500 million of 5.05% 10-year notes priced at 160 bps over Treasuries.

There was no official price talk for the sale, the source said, adding that the notes were launched at the spreads that they priced.

Bank of New York Mellon Capital Markets, Credit Suisse Securities, J.P. Morgan Securities and RBS Securities ran the books.

Proceeds will be used to repay a portion of commercial paper as it matures, to fund capital expenditures in unregulated businesses and for general corporate purposes.

The issuer is based in Charlotte, N.C.

Spectra Energy sells $300 million

Spectra Energy Capital sold $300 million of 5.65% senior notes due 2020 by early afternoon at Treasuries plus 220 bps.

The sale did not have official price guidance, a source close to it said. It was launched at 220 bps over Treasuries.

Credit Suisse Securities, RBS Securities, SunTrust Robinson Humphrey and UBS Securities were bookrunners.

Proceeds are going to fund capital expenditures and for general corporate purposes including repayment of 7.5% senior notes due in October.

The deal is guaranteed by parent natural gas company Spectra Energy Corp., which is based in Houston.

Sales done early, price well

A source who worked on two of the day's bond sales said they "priced well," and added that they "went quickly."

Both Duke Energy and Spectra Energy were announced early, launched soon after, and were sold by early afternoon.

They were "not that exciting," the source said.

A source who worked on Procter & Gamble's sale said it also went smoothly, and that investors always like a solid name such as this one.

"We had a lot of interest in it," she said. "We went out with guidance and it priced at the tight end. Investors were happy with it."

Wednesday has the potential to be one of the busiest days of the week. A source said earlier in the week that his syndicate desk had a couple of things set to price that day, and another source said she was "working on something for tomorrow" late Tuesday afternoon.

American Express bonds mostly improve

A trader said that American Express Credit Corp.'s 5.125% notes due 2014 were trading at a spread over Treasuries of 248 bps bid, 245 bps offered, a little tighter than the wide 250 bps bid, 240 bps offered seen on Monday, and still well in from the 275 bps over level at which the New York-based financial services company's unit priced its $1.5 billion of the bonds last Thursday.

A market source at another desk saw those bonds among the most actively traded issues on Tuesday, with nearly $50 million having changed hands by mid-afternoon.

At another desk, American Express' established 7¼% notes due 2014 were seen having firmed as much as 45 bps on the session to the 235 bps level, although American Express Credit's 7.30% notes due 2013 were out by more than 10 bps, also to the 235 bps level.

Westpac unseen, financials firm

The trader "didn't really see" another newly priced $1.5 billion mega-deal, for Westpac Banking Corp. The Sydney, Australia-based financial services provider priced its offering of 4.20% notes due 2015 Monday at 175 bps over.

He said that overall, "it's been kind of quiet, and better bid." He saw "a good tone to the market, a good bid in the market."

Financial issues he said, were "a little bit tighter - not screaming, but they still had a good tone," and said that the sector was "kind of bucking the trend of a lot of people talking down this market -- but with the Dow staying positive, it allows people to be comfortable in buying bonds."

Among established financial names seen trading tighter, Bank of America Corp.'s 7 3/8% notes due 2014 narrowed by 25 bps on the session to 265 bps over. The Charlotte, N.C.-based banking giant's 6.10% notes due 2017 were 10 bps tighter on the day at 325 bps.

B of A's New York-based rival, Citigroup Inc., was also mostly tighter, with is 5.125% notes due 2014 seen a dozen bps tighter at 343 bps over, and its 4.125% notes due 2010 in by 35 bps to a spread of 85 bps over Libor. But Citi's 5.10% notes due 2011 widened out by almost 20 bps to end at about 300 bps over.

General Electric Capital Corp.'s 5¼% notes due 2012 were seen having come in more than 30 bps to the 170 bps mark - although another market source was quoting the Fairfield, Conn.-based commercial lender's 6% notes due 2019 at 235 bps over, about 7 bps wider on the session, and its 6.15% notes due 2037 some 5 bps wider at 263 bps over.

Bank, brokerage CDS costs narrow

A trader who follows the credit default swaps market said that the cost of protecting holders of big-bank debt against a possible event of default , which had been unchanged on both last Friday and again on Monday, narrowed on Tuesday, by 5 bps.

He also said that CDS costs for major brokerage company paper, which had likewise remained steady the previous two sessions, also tightened Tuesday by 5 bps.

Industrials mostly tighten up

Among the non-financial names, Kraft Foods Inc.'s7% notes due 2037 were quoted by a market source as having tightened by 10 bps to 165 bps over, while Johnson & Johnson's 5.95% notes due 2037 were 85 bps over, a 20 bps tightening.

However, Home Depot Inc.'s 5.40% notes due 2016 were 5 bps wider at 145 bps over.

Another market source said that the latter bond was probably the busiest investment-grade credit on Tuesday, with over $51 million traded as of mid-afternoon.

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