Kommunalbanken prices $300 million as headlines keep others on sidelines; Equity One firms

By Aleesia Forni and Andrea Heisinger

New York, Oct. 23 - The issuance pace slowed to a crawl in the high-grade bond market on Tuesday as Kommunalbanken AS did a small deal and others sat on the sidelines.

Kommunalbanken sold $300 million of floating-rate notes due 2016 after it went overnight from Monday. The floaters were priced in line with talk.

Block Financial LLC gave the terms of its $500 million sale of 10-year senior notes done late on Monday.

Terms of a $100 million sale of floating-rate notes due 2014 were given by General Electric Capital Corp.

There was activity in the preferred stock market as Citigroup Inc. gave terms of its offering done on Monday, and Regions Financial Corp. said in the course of reporting third-quarter earnings that it was considering a sale of preferred shares.

Headlines out of the euro zone as well as some disappointing earnings announcements by some industrial names led to a soft tone at the day's start, sources said.

"Spain kind of messed things up," a market source said early in the afternoon.

The country was in the news again on word that it will have a social security deficit for 2012, some credit ratings were cut to junk level and it's believed a bailout from the European Union is on the horizon.

Another source remarked that "spreads were wider" on the day.

There are some potential offerings on tap for Wednesday.

"We have two benchmarks for tomorrow - both subject to how the market looks," a syndicate source said late in the day.

At least one issuer stood down on Tuesday amid the sour market tone, the source added.

The Markit CDX Series 18 North American Investment Grade index widened 3 basis points to a spread of 97 bps on Tuesday.

The secondary saw Equity One Inc.'s $300 million of 3.75% 10-year notes tighten 3 bps to 197 bps bid, 192 bps offered.

The notes sold at a spread of Treasuries plus 200 bps on Monday.

Kommunalbanken floaters

Norway's Kommunalbanken priced $300 million of floating-rate notes due 2016 on Tuesday at par to yield Libor plus 13 bps, a market source said.

The notes (Aaa/AAA/) were sold in line with Monday's talk in the Libor plus 13 bps area.

BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC were bookrunners.

The bank provides low-cost funding to municipalities and is based in Oslo.

Block Financial gives terms

Block Financial priced its $500 million offering of 5.5% 10-year senior notes late on Monday at Treasuries plus 375 bps, according to an FWP with the Securities and Exchange Commission.

The notes (Baa2/BBB/) were sold in line with talk in the Treasuries plus 375 bps area.

J.P. Morgan Securities LLC was active bookrunner.

Proceeds are being used to repurchase, tender, redeem or repay 7.875% senior notes due 2013 and for general corporate purposes.

The sale is guaranteed by H&R Block, Inc.

Block Financial was last in the bond market with a $600 million sale of 7.875% five-year notes priced at 481.9 bps over Treasuries on Jan. 9, 2008.

The tax preparation and financial services company is based in Kansas City, Mo.

GE Capital's $100 million

General Electric Capital priced $100 million of global senior floating-rate notes due 2014 at par to yield Libor plus 20 bps, according to an FWP with the SEC.

Citigroup Global Markets Inc. was bookrunner.

The funding arm of General Electric Co. is based in Norwalk, Conn.

Citi's preferred details

Citigroup released new details on its $1.5 billion of 5.95% series A fixed-to-floating rate noncumulative preferreds on Tuesday.

The deal priced on Monday.

Dividends will be fixed through Jan. 30, 2023, at which time the rate will adjust to Libor plus a spread of 406.8 basis points.

During the period in which the rate is fixed, the dividends will be paid semiannually in January and July. Once the rate goes to floating, dividends will be paid quarterly in January, April, July and October.

The preferreds become redeemable, in whole or in part, on Jan. 30, 2023 or in whole within 90 days of a regulatory capital treatment event.

Citi will not list the preferreds on any exchange.

Citigroup Global Markets Inc. is the bookrunning manager and structuring coordinator. Proceeds will be used for general corporate purposes.

Citigroup is a New York-based bank.

Regions mulls preferreds

As it reported its third-quarter results on Tuesday, Regions Financial announced an underwritten public preferred offering of stock was being considered.

Should market conditions remain favorable, the Birmingham-based bank will enter the market, the company said in a press release. Any proceeds would be used for general corporate purposes, including the redemption of higher-coupon trust preferreds.

For the quarter, Region reported earnings of $301 million. Loan loss provision was up 27% to $33 million.

Stephanie N. Rotondo contributed to this review

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