Commonwealth Bank of Australia, Prudential, MetLife offer bonds; Prudential, MetLife tighten

By Andrea Heisinger and Paul Deckelman

New York, Sept. 10 - Commonwealth Bank of Australia, Prudential Financial, Inc. and MetLife Global Funding I sold bonds on a Thursday that was busier than some in the investment-grade sector were expecting.

The Commonwealth Bank sale was guaranteed by the government of Australia, and priced early in the day. It totaled $2.75 billion of fixed- and floating-rate five-year notes sold under Rule 144A.

Prudential Financial offered an upsized $1.5 billion sale of notes in two tranches. A six-year tranche of notes was added to the sale, which had originally been only a three-year tranche.

MetLife's issuing subsidiary priced $1 billion of three-year notes. It was increased from $500 million.

The new deal volume will likely plummet on Friday, but issuance will resume in the coming week, a source said.

Among the established issues in the secondary arena on Thursday, a market source said the CDX Series 12 North American high-grade index tightened by 3 basis points to a mid bid-asked spread level of 110 bps.

Advancing issues jumped out to an 11-to-six edge over decliners Thursday, after having been virtually neck and neck with them the session before.

Overall market activity, reflected in dollar-volume totals, was up around 7% from Wednesday's pace.

Spreads in general were seen wider, in line with markedly lower Treasury yields; for instance, the yield on the benchmark 10-year note tightened by 12 bps Thursday to 3.35%.

The new MetLife bonds were seen having tightened notably - while rival insurer Prudential's new issue was only modestly narrower.

Among issues which priced earlier in the week, ball-bearing maker Timken Co.'s new bonds were secondary standouts, while other new issuers also showed some tightening.

Prudential upsizes deal

Prudential Financial sold $1.5 billion of notes in two tranches, increased from one tranche.

The size was increased to add six-year notes, a source said.

The $600 million of 3.625% three-year notes priced at a spread of Treasuries plus 225 bps.

A $900 million tranche of 4.75% six-year notes priced at Treasuries plus 250 bps.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital and Morgan Stanley.

The insurance and financial services company is based in Newark, N.J.

MetLife does quick sale

MetLife Inc. subsidiary MetLife Global Funding priced an upsized $1 billion of 2.875% three-year notes at Treasuries plus 160 bps. The deal was announced in early afternoon and priced before the market close.

"It came across the screens later," a market source confirmed. He said it may have been because of the Prudential deal that was announced earlier in the day.

The size was initially $500 million, a source away from the deal said.

Bank of America Merrill Lynch, Credit Suisse Securities and Deutsche Bank Securities were bookrunners.

The issuing unit of the insurance company is based in New York City.

Commonwealth Bank sells guaranteed notes

Commonwealth Bank of Australia priced $2.75 billion of notes in two tranches guaranteed by the Australian government early in the afternoon.

A $1.5 billion tranche of 2.9% five-year notes priced at Treasuries plus 64.2 bps.

The $1.25 billion of five-year floating-rate notes priced at par to yield three-month Libor plus 28 bps.

Both tranches were priced via Rule 144A.

Citigroup Global Markets and Goldman Sachs & Co. ran the books.

The financial services company is based in Sydney, Australia.

Primary conditions ripe for deals

The primary market closed on an upbeat tone Thursday, a syndicate source said. It's unlikely that there will be much issuance on Friday, but the flow should resume on Monday or Tuesday, he said.

"Demand is still there," the source said of the day's deals. "They were coming inside [price] whispers, everything was oversubscribed, the usual."

The source also remarked that the day had "good tone."

There could be a couple of lingering deals capping the week on Friday, a source said, adding that he was "not sure if everyone has issued who wants to."

Desks are also looking ahead to the coming full week, after plenty of new deals during the past holiday-shortened one.

"We should see more of the same next week," the syndicate source said. "We should stay busy like this week."

Met is hot, Pru is not

When the new Metropolitan Life Global Funding 2.875% notes due 2012 were freed for secondary dealings, a trader saw the issue having improved to 143 bps.

That was in from the 160 bps spread over comparable Treasury issues at which the New York-based insurer had priced its $1 billion of bonds.

He meantime saw Prudential's 3.625% notes due 2012 at 220 bps over, versus the 225 bps spread at which that $600 million of bonds had priced.

The other part of that deal, the company's $900 million of 4.75% notes due 2015, were little changed, at 248 bps over, versus 250 bps over at the pricing.

Timken takes off

Among the recently priced issues, a trader saw Timken's 6% notes due 2014 as the strongest performer on the session. The Canton, Ohio-based industrial bearings maker's issue had tightened to 308 bps bid, 302 bps offered.

That was well in from the 362.5 bps over level at which that $250 million issue had priced on Wednesday.

Agilent seen improved

The new Agilent Technologies Inc. two-part issue gained solidly in the secondary, a trader said, quoting the Santa Clara, Calif.-based high-tech firm's 4.45% notes due 2012 at 275 bps bid, 265 bps offered -- in by 25 bps from the 300 bps over level at which the $250 million of paper had priced on Wednesday.

Agilent's $500 million of new 5.50% notes due 2015, meanwhile, had firmed to 280 bps bid, 275 bps offered, versus 320 bps over, where the bonds had priced

National Rural three-years show gains

National Rural Utilities Cooperative Finance Corp.'s new 2.625% notes due 2012 were being quoted trading at 108 bps bid, 102 bps offered, in from its 125 bps spread at which the $250 million of bonds priced on Wednesday.

The other half of that $500 million deal - the $250 million of 3.875% notes due 2015 - had tightened more modestly, to 150 bps bid, 145 bps offered, versus 158 bps over at the pricing.

Mid-Continent Express Pipeline pops

Another Wednesday two-parter, Mid-Continent Express Pipeline LLC, was also seen better.

Its $350 million of 5.45% notes due 2014 improved to 295 bps over, versus 312.5 bps over at the pricing.

The company's $450 million of 6.7% notes due 2019 meanwhile came in to 310 bps over, from 325 bps at the pricing.

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