Bank of NY sells paper as 'horrible' week for deals ends; Intel, Rio Tinto bonds firm

By Andrea Heisinger and Cristal Cody

New York, Sept. 16 - There was one final deal to end the week on Friday as Bank of New York Mellon Corp. became the third financial name of the week to sell debt.

The New York City-based financial services company priced $1 billion of 10-year senior notes at the tight end of guidance.

The past week was termed "horrible" by one market source who said that there are "several deals in store" for the coming week but that other issuers may hold off until more favorable conditions arise.

Deals from Hewlett-Packard Co. and Exelis Inc. had a hard time being sold to investors, the source said.

"It was pretty rough for deals this week," she said. "The Exelis deal completely changed. They switched the maturity and it took forever to get done, even for a first-time issuer."

The new issue concession was also "really high," they said, citing the two-part deal from GATX Corp. on Thursday.

"I heard it was something like 100 bps to get that done," the source said.

The coming week is also not expected to be high-volume, with between $10 billion and $15 billion in new paper forecast, syndicate sources said.

"I really don't think people are going to be jumping in like they were this week," one syndicate source said. "There's going to be some hesitation over whether they want to pay the prices."

The Markit CDX Series 16 North American high-grade index ended Friday unchanged at a spread of 125 basis points.

Split-rated El Paso Pipeline Partners Operating LLC's notes stayed better in trading. Rio Tinto Finance (USA) Ltd.'s new 10-year notes also were stronger in the secondary market.

Intel Corp.'s bonds sold on Wednesday traded about 6 bps tighter on Friday, a trader said.

Overall trading volume was down 15% to more than $10 billion.

"Very dead," a trader said. "Mixed bag, some things are 2 [bps] better, some are 2 wider on the day."

Financial paper traded about 5 bps to 10 bps wider, a source said.

On the credit default swaps side, the CDS costs to protect bank and broker paper were higher on the day, showing lessened investor confidence in the financials sector, a trader said.

Bank of America's CDS costs rose 10 bps to 320 bps bid, 335 bps offered. J.P. Morgan's CDS costs edged up 1 bp to 118 bps bid, 123 bps offered.

On the brokerage side, Morgan Stanley's CDS costs rose 2 bps to 300 bps bid, 310 bps offered. Merrill Lynch's CDS costs rose 10 bps to 360 bps bid, 380 bps offered and Goldman Sachs' CDS costs ended 5 bps higher at 223 bps bid, 233 bps offered.

Treasuries were better on Friday. The 10-year note yield closed Friday down 3 bps to 2.05%. The 30-year bond yield fell 5 bps to 3.31%.

Bank of NY's 10-year notes

Bank of New York Mellon sold $1 billion of 10-year senior notes (Aa2/AA-/AA-) to yield Treasuries plus 148 bps, a market source said.

They were priced at the low end of guidance for a spread in the 150 bps area.

Bookrunners were BNY Mellon Capital Markets LLC, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC.

Proceeds are being used for general corporate purposes.

Bank of NY last priced debt in a $1.6 billion deal in two tranches on July 21.

The financial services company is based in New York City.

El Paso better

El Paso Pipeline Partners Operating's notes due 2021 stayed stronger in the secondary market on Friday, going out at 288 bps bid, 283 bps offered, a trader said.

The company sold $500 million of 5% 10-year split-rated senior notes (Ba1/BB/BBB-) at a spread of Treasuries plus 300 bps.

The natural gas transportation and storage company is based in Houston.

Rio Tinto firms

The 3.75% notes due 2021 (A3/A-/A-) that Rio Tinto Finance (USA) priced on Thursday traded tighter on Friday to 164 bps bid, 160 bps offered, a source said.

Rio Tinto sold $1.15 billion of the 10-year notes at a spread of 178 bps over Treasuries.

The mining company is based in Melbourne, Australia, and London.

Intel tightens

Also in the secondary market, Intel's $5 billion of senior notes (A1/A+) sold on Wednesday were better in trading.

A trader saw the 4.8% bonds due 2041 6 bps better at 144 bps bid, 141 bps offered.

The company sold $1.5 billion of the 30-year bonds at Treasuries plus 160 bps.

The semiconductor chip maker is based in Santa Clara, Calif.

Paul Deckelman contributed to this review

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