Nomura, BNP Paribas, HSBC Bank price as banks keep hold on primary; new deals firm 5-10 bps

By Andrea Heisinger and Cristal Cody

New York, Jan. 12 - The wave of new financial bonds hitting the primary didn't cease on Wednesday. Nomura Holdings, Inc., BNP Paribas SA, HSBC Bank plc and Elm Road Generating Station Supercritical LLC all priced paper.

HSBC had the largest sale of the day and one of the largest of the year to date. The bank priced $4 billion of notes in four parts that had both floating- and fixed-rate tranches.

Tokyo-based Nomura Holdings sold $1.25 billion of five-year notes by mid-afternoon after the sale went overnight.

Another overseas financial name, BNP Paribas, priced $2 billion of 10-year notes later in the day.

Away from the financial names in the market there was a Rule 144A sale from Elm Road Generating. The Milwaukee-based issuer priced $420 million of notes in two parts in a deal similar to one it did at the beginning of 2010.

First Potomac Realty Trust sold its preferred shares that had gone overnight from Tuesday. The real estate investment trust priced $100 million of perpetual cumulative preferreds.

The day was again full of Yankee bonds, and that could continue on Thursday and possibly into the coming week, a source said at the end of the day.

A lot of these banks are prefunding at the beginning of the year.

"They did the same thing last year," the source said, adding that they're doing it "because they can."

There's a deal planned for Thursday from Japan Finance Corp. The lender is pricing notes backed by the Japanese government.

Otherwise there have been no deals announced with solid pricing dates.

Overall investment-grade Trace volume was flat at about $15.6 billion on Wednesday, according to a market source.

Secondary market activity was "quiet today. It seemed lighter probably due to the snow on the East Coast," a source said. "Volume's decent."

Snow was on the ground in 49 states, all except Florida, the National Weather Service reported on Wednesday.

In the secondary market, Nomura Holdings' notes firmed 5 basis points, while BNP Paribas' new 10-year notes tightened 10 bps in trading, sources said.

The Markit CDX Series 14 North American investment-grade index was 2 bps tighter on Wednesday at a spread of 84 bps, Markit Group Ltd. said.

Treasuries ended the day lower after a strong auction of $21 billion of 10-year notes and on lessening eurozone fears after Portugal completed a bond deal before the U.S. markets opened.

The yield on the 10-year benchmark note rose 2 bps to 3.36%. The 30-year bond yield added 4 bps to end the day at 4.53%.

HSBC's massive $4 billion deal

HSBC Bank sold $4 billion of notes (Aa2/AA/AA) late in the day in four parts, a source away from the offering said.

Pricing was well after 5 p.m. ET.

A $900 million tranche of two-year floating-rate notes priced at par to yield Libor plus 40 bps.

The second part was $1.35 billion of three-year floaters priced at par to yield Libor plus 80 bps.

There was a $750 million tranche of 2% three-year notes priced at a spread of Treasuries plus 105 bps.

The final part was $1 billion of 4.75% 10-year notes priced at 140 bps over Treasuries.

The deal was priced under Rule 144A.

All of the tranches launched and priced in line with guidance, a source said. Total book size wasn't available at press time because of the lateness of pricing.

HSBC Securities (USA) Inc. was the bookrunner.

The financial services company is based in London.

Nomura sells $1.25 billion

Nomura Holdings priced $1.25 billion of 4.125% five-year notes (Baa2/BBB+) to yield Treasuries plus 225 bps, according to an FWP filing with the Securities and Exchange Commission and a market source.

The sale had gone overnight from Tuesday.

Nomura Securities International Inc. was the bookrunner.

In secondary trading, Nomura's notes firmed in the late afternoon to 220 bps bid, 218 bps offered, a trader said.

The financial holding company is based in Tokyo.

BNP Paribas' 10-year deal

BNP Paribas priced $2 billion of 5% 10-year senior notes (Aa2/AA/AA-) before the market close to yield Treasuries plus 175 bps, a market source said late in the afternoon.

BNP Paribas Securities Corp. was the bookrunner.

Once free to trade in the secondary market, the notes firmed to 167 bps on the bid side, a trader said.

A trader on another desk saw the 10-year notes continuing to tighten to 165 bps bid, 160 bps offered.

The financial services company is based in Paris.

Elm Road offers long bonds

Elm Road Generating Station priced a $420 million issue of notes (A2/A/A+) in two parts late in the day, a source who worked on the sale said.

A $205 million tranche of 4.673% 20-year notes priced at a spread of Treasuries plus 130 bps.

The second tranche was $215 million of 5.848% 30-year bonds priced at a spread of Treasuries plus 130 bps.

The sale was priced under Rule 144A.

It was similar to the company's $530 million sale of notes with the same tenors on Feb. 3, 2010. The 20-year notes from that sale priced at 150 bps and the 30-year tranche at 145 bps.

The bookrunners for the new notes were Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc., Mitsubishi UFJ Securities International plc and Wells Fargo Securities LLC.

The issuer is based in Milwaukee.

First Potomac prices preferreds

First Potomac Realty Trust priced $100 million, or 4 million shares, of 7.75% series A cumulative perpetual preferred shares at par of $25 after the sale went overnight, an informed source said.

There is an over-allotment option of 15% of the initial shares sold, or 600,000 shares, to be used within 30 days.

Wells Fargo Securities LLC managed the books for the sale.

Proceeds will be contributed to the company's operating partnership in exchange for preferred partnership units. The operating partnership will use the proceeds to repay a portion of its outstanding revolver, to fund the acquisition of properties, for working capital and for general corporate purposes.

The real estate investment trust for industrial properties in the Washington, D.C., area is based in Bethesda, Md.

Japan Finance to sell

Japan Finance announced a sale of guaranteed bonds (Aa2/AA) in a 424B5 filing with the SEC.

Deutsche Bank Securities Inc., Barclays Capital Inc. and Goldman Sachs & Co. are the bookrunners.

Proceeds are being put toward the operation of the Japan Bank for International Cooperation.

The sale is guaranteed by the government of Japan.

The lender to the general public and Japanese businesses is based in Tokyo.

Sallie Mae proves popular

A trader said that the new split-rated 6.25% bonds of SLM Corp. - "Sallie Mae" - must have traded at "10 times the size" of anything else in the rest of the market on Wednesday following its pricing.

He said that while it carries a Ba1 rating from Moody's Investors Service - technically a junk rating - "it is more of a crossover bond" because it has BBB- ratings from both Standard & Poor's and Fitch Ratings.

At his shop, the high-grade guys have been trading it, and he said that it seemed like mostly high-grade accounts were playing in it. "I think that if there are any high-yield accounts in them, they're going to the high-grade guys to trade them."

He further opined that "it just happens to be listed on Trace under high yield" because of the Moody's rating.

At another junk desk, a trader said that "this morning, a lot of them were trading right at the par level during the first part of the morning" - up from the 98.939 at which the bonds had priced - "and then they worked their way up" to around the 100 3/8 level.

Paul Deckelman contributed to this report

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