Precision Castparts, Florida Power sell as pipeline slows; Citi weakens; Teva bonds active

By Aleesia Forni and Andrea Heisinger

New York, Dec. 17 - The pipeline for Monday was light on new bonds as Precision Castparts Corp. and Florida Power & Light Co. priced.

Precision Castparts sold $3 billion of notes in four maturities. Each tranche sold about 20 basis points tighter than initial price guidance.

Florida Power & Light tapped the market for $400 million of 30-year bonds at the tight end of talk.

Between $5 billion and $10 billion of bonds are expected to price this week, so there is more supply to come, sources said.

One market source said there "should be one or two smaller [sales] tomorrow."

"We're already looking at a dead week," the source added. "The market was OK, but most people are holding off until next year."

The Markit CDX Series 18 North American Investment Grade index tightened 3 bpa to a spread of 92 bps on Monday.

Thursday's issuance from Teva Pharmaceutical Finance Co. BV was one of the most actively traded deals on the day, with the notes due 2022 trading 3 bps tighter compared to Friday's levels.

Bank paper from Citigroup, Morgan Stanley and Bank of America was trading weaker on Monday, according to a market source.

Compared to levels seen during the Dec. 10 week, Citigroup's 6.375% notes due 2014 were seen 10 basis points wider.

Bank of America's 7.625% notes due 2019 and Morgan Stanley's 7.3% notes due 2019 were both wider by 1 bp.

Investment-grade bank and brokerage credit default swaps costs declined on Monday.

Bank of America's CDS costs were 6 bps wider at 123 bps bid, 128 bps offered. Citi's CDS costs were 4 bps wider at 115 bps bid, 120 bps offered. J.P. Morgan's CDS costs declined 1 bp to 83 bps bid, 88 bps offered. Wells Fargo's CDS costs were 3 bps wider at 71 bps bid, 76 bps offered.

Merrill Lynch's CDS costs were 4 bps wider at 120 bps bid, 130 bps offered. Morgan Stanley's CDS costs rose 8 bps to 185 bps bid, 195 bps offered. Goldman Sachs' CDS costs were 6 bps wider at 143 bps bid, 148 bps offered.

Precision Castparts' $3 billion

Precision Castparts was in the market with a $3 billion sale of notes (A2/A-/) in four maturities, a source close to the trade said.

The size of the sale was upsized from talk between $2 billion and $2.5 billion, the source said.

There was roughly $19 billion of investor demand for the bonds, skewed slightly toward the tranches due 2023 and 2043.

The company last sold bonds in 2003, the source close to the trade said.

A $500 million tranche of 0.7% three-year notes sold at a spread of Treasuries plus 35 bps. Initial price guidance was in the Treasuries plus 50 bps area and later revised to 35 bps to 45 bps.

The $1 billion of 1.25% five-year notes were priced at Treasuries plus 55 bps. Initial talk was in the 75 bps area and later revised to 55 bps to 65 bps.

The $1 billion of 2.5% notes due 2023 sold at a spread of 80 bps over Treasuries. There was initial talk in the100 bps area, with a later revision to 80 bps to 90 bps.

Finally, the $500 million tranche of 3.9% bonds due 2043 sold at a spread of Treasuries plus 100 bps. Initial guidance was in the 125 bps area, and later revised to 100 bps to 110 bps.

Active bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC.

Proceeds are being used to finance the purchase price of all outstanding shares of Titanium Metals Corp. in an acquisition and for general corporate purposes.

There is a mandatory call if the acquisition is not done by May 1, 2013.

The metal component and industrial products manufacturer for the aerospace industry is based in Portland, Ore.

FPL's long bond

Florida Power & Light priced $400 million of 3.8% 30-year first mortgage bonds (Aa3/A/AA-) to yield Treasuries plus 92 basis points, according to a market source and FWP with the Securities and Exchange Commission.

The bonds were sold at the tight end of guidance in the range of Treasuries plus 92 bps to 98 bps.

Bookrunners were BNP Paribas Securities Corp., BNY Mellon Capital Markets LLC, Citigroup Global Markets Inc., Goldman Sachs & Co., Scotia Capital (USA) Inc. and U.S. Bancorp Investments Inc.

Proceeds are being added to the company's general funds and used to repay commercial paper as well as for general corporate purposes.

The utility subsidiary of NextEra Energy Inc. is based in Juno Beach, Fla.

Teva bonds firm

Teva Pharmaceutical Finance IV LLC and Teva Pharmaceutical Finance Co. BV's notes issued on Thursday were wider during the session, a trader said.

The $700 million tranche of 2.25% notes due 2020 sold by Teva Pharmaceutical Finance IV was quoted at 103 basis points bid, 98 bps offered. The notes were seen at 96 bps offered on Friday.

The notes were priced with a spread of Treasuries plus 110 bps.

The $1.3 billion tranche of 2.95% 10-year notes priced by Teva Pharmaceutical Finance Co. was trading 3 bps weaker compared to Friday's levels at 123 bps bid, 120 bps offered.

The notes were sold with a spread of Treasuries plus 125 bps.

The global maker of generic and over- the-counter pharmaceuticals is based in Petach Tikva, Israel.

Bank of America

Bank of America's 7.625% notes due 2019 widened 1 bps to 122 bps bid compared to levels seen on Dec. 12.

The bank priced $2.5 billion of the notes on May 8, 2009 at 410 bps over Treasuries.

Morgan Stanley active

Also in the secondary, Morgan Stanley's 7.3% notes due 2019 traded 1 bp weaker from Wednesday's levels at 188 bps bid.

Morgan Stanley priced $1 billion of the notes at 360 bps over Treasuries in May 2009.

Citi widens

In other trading, Citigroup's 6.375% notes due 2014 widened 10 bps to 117 bps bid.

The bank priced $2.5 billion five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

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