Wells Fargo notes price, trade tighter; TVA brings bonds as issuance volume hits week's target

By Aleesia Forni and Andrea Heisinger

New York, Dec. 18 - A small crop of issuance was in Tuesday's primary market, including bond sales from Wells Fargo & Co. and Tennessee Valley Authority.

Wells Fargo priced $1.25 billion of five-year senior holding company notes tighter than guidance.

Government-owned utility TVA sold $1 billion of 30-year bonds at the low end of talk.

There was a sale in the preferred stock market on Tuesday from Stifel Financial Corp. The financial priced $150 million of 10-year $25-par securities.

The remainder of the week and year are said to be light on new deals as companies and syndicate desks wrap things up for 2012.

"I'm really not hearing of much," one source said of supply ahead of Christmas. "I don't think many people are planning anything until the New Year. A lot of investors are done."

The Markit CDX Series 18 North American Investment Grade index tightened 3 bps to a spread of 89 bps on Tuesday.

Wells Fargo's new notes were trading 5 basis points better near the end of the session, one trader said.

Another trader said Monday's deal from Florida Power & Light Co. was trading flat compared to its issue price.

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

Bank of America's CDS costs were 5 bps tighter at 117 bps bid, 122 bps offered. Citi's CDS costs were unchanged at 115 bps bid, 120 bps offered. J.P. Morgan's CDS costs declined 1 bp to 80 bps bid, 85 bps offered. Wells Fargo's CDS costs were 1 bp tighter at 70 bps bid, 75 bps offered.

Merrill Lynch's CDS costs were 8 bps tighter at 120 bps bid, 130 bps offered. Morgan Stanley's CDS costs declined 9 bps to 170 bps bid, 175 bps offered. Goldman Sachs' CDS costs were 5 bps tighter at 135 bps bid, 140 bps offered.

Wells prices $1.25 billion

Wells Fargo was in the market with a $1.25 billion sale of 1.5% five-year senior holding company notes priced to yield Treasuries plus 78 bps, a market source said.

There was about $3.5 billion of investor demand for the bonds, a source said.

The notes (A2/A+/AA-) were sold tighter than talk in the Treasuries plus 85 bps area.

A trader quoted the notes at 73 bps bid, 71 bps offered near the day's close.

Wells Fargo Securities LLC was bookrunner.

The San Francisco-based financial services company was last in the straight bond market with a $2.75 billion sale of three-year notes in two tranches on June 20.

TVA prices long bond

The Tennessee Valley Authority priced $1 billion of 3.5% 30-year bonds (Aaa/AA+/AAA) at Treasuries plus 63 bps, a source told Prospect News.

The sale was done at the tight end of talk in the 65 bps area.

Bookrunners were Bank of America Merrill Lynch, Barclays and Morgan Stanley & Co. LLC.

TVA last priced bonds in the U.S. market with a $1 billion offering of 10-year notes on Aug. 6.

The government-owned electric utility is based in Knoxville, Tenn.

Stifel's $25-pars

Stifel Financial has priced $150 million of 5.375% $25-par senior notes due Dec. 31, 2022, a market source said.

"It's holding up pretty well," the trader said at midday as the deal had launched, seeing a $24.90 bid, $24.94 offered market in the gray at midafternoon.

After pricing shortly before the close, a trader quoted the notes at $24.90 bid, $24.95 offered.

Another source said the issue "technically closed" at par, though "most of the sizeable trades" occurred between $24.91 and $24.92, he said.

"There is this feeling that if you are going to bring stuff, you want to do it now ahead of the fiscal cliff," the trader said.

With interest rates at their lows and optimism about the fiscal cliff being avoided - not to mention hope that dividend taxation won't be "too harsh" - issuers are in "a sweet spot," the trader remarked.

"Raise it now while you can at these levels because there is no certainty that you will be able to do it in the first quarter of next year."

Stifel will apply to list the notes on the New York Stock Exchange.

Joint bookrunners are Stifel Nicolaus & Co., Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Keefe, Bruyette & Woods, JMP Securities Inc. and U.S. Bancorp.

Proceeds will be used for general corporate purposes.

Stifel is a St. Louis-based full-service retail and institutional brokerage and investment bank.

FPL notes unchanged

The recent deal from Florida Power & Light Co. was trading flat on Tuesday.

A trader quoted the $400 million of 3.8% 30-year first mortgage bonds at 92 bps points bid, 88 bps offered.

The Juno Beach, Fla,-based utility subsidiary of NextEra Energy Inc. sold the notes with a spread of Treasuries plus 92 bps on Monday.

Stephanie N. Rotondo contributed to this review

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