Westpac Banking, Canada, U.S. Bancorp offer bonds; Plains widens; spreads weak on Treasuries

By Andrea Heisinger and Paul Deckelman

New York, Sept. 2 - Westpac Banking Corp., Canada and U.S. Bancorp each issued notes early Wednesday. Two of these deals were expected, while U.S. Bancorp "snuck in there," according to a market source.

These issues pricing will likely leave a relatively empty primary market for the remainder of the week.

Westpac priced $3.5 billion due in five years split evenly between floaters and fixed-rate notes. They were priced via Rule 144A and guaranteed by the Australian government.

Canada sold $3 billion in five-year notes at 23.5 bps over Treasuries after announcing the offering a day before. It was not expected to sell until Thursday.

U.S. Bancorp also came into the market with a $350 million deal of senior notes due 2013.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series 12 North American high-grade index widened by 2 basis points to a mid bid-asked spread level of 124 bps.

Advancing issues - which remained ahead of decliners for a sixth straight day on Tuesday, continued to hold a three-to-two advantage on Wednesday.

Overall market activity, reflected in dollar-volume totals, rose about 6% from Tuesday's pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-years fell by 6 bps Tuesday to 3.30%.

The new Plains All-American Pipeline LP bonds were seen having widened out markedly from both their spread at pricing and their initial secondary dealings.

Meanwhile, the new Republic Services Inc. bonds which priced on Monday were seen continuing to hold tighter levels than where they had priced earlier Monday.

Westpac offers two tranches

Westpac Banking sold $3.5 billion notes in two tranches in early afternoon after the deal went overnight. The sale was announced early Tuesday, but was delayed due to the company's location overseas, a source away from the deal said.

"I'm sure they wanted to build more investors," he said.

A $1.75 billion tranche of 2.9% five-year notes priced at Treasuries plus 65.7 bps.

The $1.75 billion tranche of five-year floating-rate notes priced at par to yield three-month Libor plus 28 bps.

They were priced via Rule 144A and are guaranteed by the Australian government.

Bank of America Merrill Lynch and Goldman Sachs & Co. ran the books.

The banking and financial services company is based in Sydney, Australia.

Issuance to halt for week

Although there are technically two days remaining to price a deal before the long Labor Day weekend, it's not likely that any will get done.

A syndicate source said his desk had nothing until the coming week, and added it was "pretty deserted out there, even today."

Desks are expected to be thinly staffed in the next two days, with nothing getting done.

"I think they're just cleaning up," the source said, referring to paperwork and other details. "We're basically on vacation."

September is expected to have more issuance than the traditionally slow August did, a source said. Volume is expected to pick up by between $10 billion and $20 billion compared to the north of $50 billion that priced in August.

Canada prices five-year

Canada sold $3 billion in 2.375% five-year bonds at Treasuries plus 23.5 bps, according to an FWP filing with the Securities and Exchange Commission.

The sale was initially announced late Tuesday, and wasn't expected to price until Thursday, a syndicate source said.

Bookrunners were Bank of America Merrill Lynch, BNP Paribas Securities, J.P. Morgan Securities and RBC Capital Markets.

The issuer is based in Ottawa, Ont.

U.S. Bancorp does small sale

U.S. Bancorp offered $350 million 2.125% senior notes due 2013 on at Treasuries plus 85 bps, a market source away from the deal said.

"It was kind of a surprise," the source said, "but I'm guessing they thought they need to [price] today."

Bookrunner was Barclays Capital.

The financial holding company for U.S. Bank is based in Minneapolis.

Plains bonds widen out

A trader said that the new Plains All-American Pipeline 5.75% notes due 2020 had widened out notably from Tuesday's levels, ending at a spread over comparable Treasury issues of 278 bps bid, 272 bps offered.

That was well out from the 250 bps bid, 242 bps offered level at which the Houston-based natural gas pipeline company's bonds had finished on Tuesday, which itself was a little wider than the 245 bps spread at which the $500 million issue - upsized from $350 million originally - had priced earlier Tuesday.

Natural gas-oriented energy credits in general were seen lower in both the high-grade and the junk markets, as gas prices fell for a third-straight session Wednesday ahead of Thursday's release of a government report expected to show a buildup in inventories. Natural gas for October delivery fell 10.6 cents, or 3.8%, to settle at $2.715 per million British thermal units on Wednesday on the New York Mercantile Exchange.

Republic Services stays tight

On the other hand, a trader said that Republic Services' 5.50% notes due 2019 were trading at 206 bps bid, 202 bps offered, slightly tighter than the 207 bps bid, 205 bps offered seen in Tuesday's dealings.

It was also again well inside the 220 bps over level at which the Phoenix-based solid waste disposal company had priced its $650 million of bonds - upsized from the originally planned $500 million -- on Monday.

No U.S. Bancorp bonds seen

A trader in financial issues did not see any immediate aftermarket in the U.S. Bancorp 2.125% notes due 2013, which priced earlier in the session at 85 bps over.

He opined that the pricing level was "pretty aggressive, I think" - but said that the $350 million offering, upsized from $250 million originally, may have "all been put away" soon after pricing.

Speaking more generally, the trader said that things in his sector felt "a little bit better" in the morning, then "a little bit weaker as the day progressed, but overall - unchanged."

Issues were "maybe a little weaker here, a little stronger there, but generically they were unchanged."

Elsewhere among the financials, Goldman Sachs Group Inc.'s 5.15% notes due 2014 were seen having tightened about 20 bps on the session to around the 145 bps over level.

JP Morgan Chase & Co.'s bonds were seen mixed, with the New York-based banking giant's 5.15% notes due 2015 quoted in 20 bps on the day, at 200 bps over, but its 5.125% notes due 2014 among the more prominent issues seen gapping out, ending at 175 bps over, a 25 bps widening out on the day.

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