Commonwealth Edison and Senior Housing Properties price paper; Progress Energy bonds widen

By Andrea Heisinger and Cristal Cody

New York, Jan. 10 - Commonwealth Edison Co. and Senior Housing Properties Trust were in the high-grade market with new paper on Monday.

Com Ed sold its bonds first in an upsized $600 million deal of three-year first mortgage bonds. The sale size was increased from $500 million and priced at the tight end of guidance

Pricing later in the day was Senior Housing Properties. The real estate investment trust priced $250 million of three-year senior notes without bringing any official guidance.

The market tone was "OK" by the close, a source said. There are more deals upcoming on Tuesday and Wednesday, but a syndicate source said that there are "no blockbuster deals" expected to price like the previous week when the market was bombarded with large bond offerings.

"I don't think we're going to come close to last week," the source said. "I wish we would, but it's not going to happen."

High-grade bond spreads widened out 2 bps to 3 bps on Monday, a source said.

Overall investment-grade Trace volume fell 6% to about $10 billion, a market source said.

In secondary trading, bank paper was about 3 bps wider on "weak sentiment after Friday's foreclosure court decision," a trader said.

Also on Monday, bonds in the utility sector ended the day 2 bps to 5 bps weaker.

Duke Energy Corp.'s announcement it would buy out Progress Energy Inc. sent the target's bonds wider on Monday, a source said.

In other secondary trading, the new deal from Commonwealth Edison firmed slightly, sources said.

The Markit CDX Series 14 North American investment-grade index ended Monday flat at a spread of 89 bps, Markit Group Ltd. said.

Treasuries ended the day up on concerns over euro sovereign debt as the cost to insure Portuguese debt against default rose.

The yield on the 10-year benchmark note fell to 3.28% from 3.32% on Friday. The 30-year bond yield dropped 2 bps to 4.46%.

Com Ed upsizes three-years

Electric utility Commonwealth Edison priced an upsized $600 million of 1.625% three-year first mortgage bonds, series 110 (Baa1/A-/BBB+) to yield Treasuries plus 70 bps, a market source said by mid-afternoon.

The deal size was increased from $500 million, he said. The notes were priced at the tight end of guidance in the 75 bps area.

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. were bookrunners.

Proceeds are being used as an interim source of liquidity for a planned Jan. 2011 contribution to Exelon-sponsored pension plans.

The notes firmed immediately in the secondary market to 69 bps bid, 65 bps offered, a trader said.

Late afternoon, the notes were seen by a trader on another desk trading at the same range.

The electric subsidiary of Exelon Corp. is based in Chicago.

Senior Housing's $250 million

Senior Housing Properties Trust sold $250 million of 4.3% senior notes (Baa3/BBB-) by late afternoon at a spread of Treasuries plus 262.5 bps, an informed source said.

There was no price talk on the sale, and it went straight to launch, the source said. The deal was slightly oversubscribed with about $300 million on the books.

UBS Securities LLC, Citigroup Global Markets Inc., RBC Capital Markets Corp. and Wells Fargo Securities LLC were bookrunners.

Proceeds will be used to repay amounts outstanding under a revolving credit facility and for general business purposes, including funding possible future acquisitions of properties.

The real estate investment trust for senior living properties is based in Newton, Mass.

Progress Energy widens on merger

Progress Energy's bonds widened on Monday after Duke Energy announced it would buy the company for $13.7 billion.

"They look about 5 wider," a trader said.

The deal would create the largest U.S. power company and will have to face regulators' approval.

Under the deal, Progress Energy shareholders would receive 2.6125 shares of stock of Duke Energy for each share held, valued at $46.48 per share based on the company's closing stock on Friday. Also, Duke Energy said it will assume $12.2 billion in Progress Energy's debt.

Raleigh, N.C.-based Progress Energy provides electricity in North Carolina, South Carolina and Florida.

Charlotte, N.C.-based Duke Energy distributes power in North Carolina, South Carolina, Ohio, Indiana and Kentucky.

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