Markel, Barclays Bank, Kimco Realty, Citigroup price, Zions Bank plans sale; new deals tighten

By Andrea Heisinger and Paul Deckelman

New York, Sept. 17 - Markel Corp., Barclays Bank plc, Kimco Realty Corp. and Citigroup Inc. and sold bonds Thursday as volume continued flowing into the high-grade market.

Zions Bancorporation announced a sale of five-year notes early in the day, but it is not pricing until Friday.

The new deals were announced in the morning, with most pricing by mid-afternoon.

Citigroup followed up its four-tranche sale of notes backed by the Federal Deposit Insurance Corp. on Tuesday with a $2 billion sale of five-year notes without the government guarantee.

Barclays Bank also priced $2 billion, but it brought seven-year notes priced at a significantly lower spread than Citigroup's.

Non-bank issuers were represented by Markel, a specialty insurance underwriter, which priced an upsized $350 million of 10-year notes. Kimco Realty, operator of shopping centers, also upsized its deal, pricing $300 million of 10-year notes.

Sources expressed relief that the hectic week is nearly done, and are hoping Friday will be a quiet day with little issuance.

"We're still mopping up," a syndicate source said at the end of Thursday.

Among the established issues in the secondary arena on Thursday, a market source said the CDX Series 12 North American high-grade index widened by 4 basis points to a mid bid-asked spread level of 102 bps.

Advancing issues were seen leading decliners Thursday by around a 10-to-7 margin, somewhat improved from the 10-to-9 advantage they had maintained on Wednesday.

Overall market activity, reflected in dollar-volume totals, fell 12% from Wednesday's pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year government note narrowed by 8 bps on Thursday to 3.39%.

The newly priced financial issues such as Markel, Citigroup and Barclays Bank dominated the secondary realm, with all three seen having tightened from the respective spreads over comparable Treasuries at which they had priced.

Citigroup offers non-FDIC notes

Citigroup sold $2 billion of 5.5% five-year senior notes at Treasuries plus 325 bps.

The notes did not deviate from price talk, the informed source said, selling at the 325 bps at which the sale launched.

The sale comes two days after the company sold $5 billion of notes in four tranches backed by the Federal Deposit Insurance Corp.

A source said he "couldn't say" if the deal Thursday was opportunistic or planned.

Despite the same size and similar maturity of the Barclays deal, there was no looking at that sale for price guidance, he said.

"I can say, not at all," he said. "It was just coincidental."

The timing of Citi's deal was due to the market being "open for unguaranteed [bonds]," he said.

Citigroup Global Markets was bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in New York City.

Kimco upsizes to $300 million

Kimco Realty priced an upsized $300 million of 6.875% 10-year unsecured notes at Treasuries plus 350 bps, an informed source said.

The size was increased from $250 million, he said. There was strong interest, and it was oversubscribed, a source who worked on the sale said.

J.P. Morgan Securities, Morgan Stanley and Wells Fargo Securities ran the books.

Proceeds will be used to repay $220 million in debt and for general corporate purposes.

The owner and operator of shopping centers is based in New Hyde Park, N.Y.

Markel offers upsized 10-year

Specialty insurance company Markel sold an upsized $350 million of 7.125% 10-year senior notes at Treasuries plus 375 bps.

The size was initially $250 million, a source close to the sale said. There was also high interest in this sale, just as there was with the Kimco offering, a source said. It was about two-and-a-half to three-times oversubscribed, he said, as was Kimco's.

They both had "good quality in the books, a lot of good accounts," he said.

Bookrunners were Barclays Capital and Wells Fargo Securities.

Proceeds will be used for general corporate purposes, including acquisitions.

The issuer is based in Glen Allen, Va.

Market hopes for Friday break

Some in the high-grade market were hoping for, but did not get, a quiet Thursday. They are now wishing for a dull Friday.

"It would be really nice if it would slow down," a syndicate source said when asked if anything was expected to price Friday.

Other than the small deal from Zions Bancorporation, nothing solid is on the plate for the end of the week.

"I think both sides [of the market] need a break," the source said, referring also to the secondary market.

"It's been crazy."

The general trend of a slow start to the week didn't necessarily happen, as several deals were done off the bat on Monday, followed by Tuesday and Wednesday's further swarm of new offerings. It has, overall, been one of the busiest weeks of the year to date.

"We need a break," a market source said.

Barclays sells $2 billion

Barclays Bank sold $2 billion 5% seven-year global notes at Treasuries plus 200 bps, an informed source said.

Barclays Capital ran the books.

The financial services company is based in London.

Zions Bank plans five-year sale

Zions Bancorporation is planning a sale of five-year senior notes, an informed source said.

The notes are set to price Friday, the source said late in the day.

A market source away from the sale said the size is $300 million.

The delay is not unusual, a source close to the sale said.

"It takes more [investor] time to look at this name," he said. This is because they are an infrequent issuer, he added.

Bookrunners are Deutsche Bank Securities and Goldman Sachs & Co.

Proceeds will be used for repayment of $295.63 million in floating-rate senior notes due Dec. 10 and for general corporate purposes.

The financial holding company is based in Salt Lake City, Utah.

New Markel bonds move up

When the new Markel Corp. 7.125% notes due 2019 were freed for secondary trading, a trader saw the bonds trading at 365 bps bid, 355 bps offered.

That was in from the 375 bps over level at which that $350 million issue - upsized from $250 million - had priced earlier in the day.

Citigroup issue comes in

Citigroup's new 5.5% notes due 2014 were seen having tightened to 318 bps bid, 312 bps offered.

That was in from the 325 bps over level at which the New York-based banking giant had priced its $2 billion of non-FDIC bonds earlier in the session,

However, a market source at another shop saw Citi's existing 6.875% bonds due 2038 having widened out some 35 bps to around the 290 bps over level.

Yet another source - who saw those bonds widen out to around 300 bps over - noted that nearly $40 million of the bonds had changed hands by mid-afternoon, making it one of the day's more actively traded issues.

But Citi's busiest bond was its 8.50% notes due 2019, which gapped out to about 325 bps over, a 25 bps widening, on over $55 million traded at mid-afternoon.

Barclays bonds better

Back on the upside, the first trader saw Barclays Bank's new 5% notes due 2016 at 186 bps bid, 183 bps offered - versus the 200 bps over level at which the bonds priced earlier in the session.

Bank, brokerage CDS costs little changed

Also among the financials, a trader who follows the credit default swaps market said that the cost of protecting holders of big-bank debt, and major brokerage company paper, against a possible event of default was unchanged to 5 bps wider Thursday, after having been between 5 bps and 30 bps tighter on Wednesday.

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