Exelon, City National Bank bring offerings; market tone flat; bank, broker CDS costs mixed

By Aleesia Forni and Andrea Heisinger

New York, June 13 - A few issuers made their way to the high-grade market on Wednesday.

Exelon Generation Co. LLC priced $775 million of notes due in 2022 and 2042 via Rule 144A and Regulation S.

Los Angeles-based City National Bank priced $150 million of 10-year notes.

Network Rail Infrastructure Finance plc was in the market with a $1.5 billion sale of three-year notes sold privately in the morning.

An offering of two-year notes was done by Zions Bancorporation through an online auction. The deal had been announced on Monday.

A sovereign deal was announced by the Province of Alberta, and pricing is expected Thursday.

Issuance has been skewed toward the beginning of the week, and there's not much expected for Thursday or Friday despite a "decent tone."

Those wanting to get into the market to take advantage of optimal yields and borrowing rates are pricing bonds this week ahead of the weekend's elections in Greece.

"No one knows what next week will be like," a market source said. "Best to get in now."

An auction of 10-year Treasury notes coupled with testimony by JPMorgan Chase & Co. head Jamie Dimon before Congress brought the tone down, although not enough to completely sweep the primary clean of deals.

"I don't know. The Dow ended down, but I don't think it was that bad," a syndicate source said late in the day, adding that there's "nothing really that exciting" expected for the rest of the week.

Meanwhile, investment-grade bank and brokerage credit default swap costs were mixed on Wednesday, according to a market source.

Bank of America's CDS costs widened 9 basis points to 294 bps bid, 304 bps offered. Citi's CDS costs widened 10 bps to 272 bps bid, 282 bps offered. JPMorgan's CDS costs were 1 bps tighter at 168 bps bid, 173 bps offered.

Merrill Lynch's CDS costs were 10 bps wider at 315 bps bid, 330 bps offered. Morgan Stanley's CDS costs were 5 bps tighter at 408 bps bid, 418 bps offered. Goldman Sachs' CDS costs widened 3 bps to 315 bps bid, 330 bps offered.

Exelon sells $775 million

Exelon Generation sold $775 million of notes (Baa1/BBB/BBB+) in two maturities, a source who worked on the trade said.

The $275 million of 4.25% 10-year notes priced at Treasuries plus 265 bps.

A $500 million tranche of 5.6% 30-year bonds sold at a spread of 290 bps over Treasuries.

Barclays Capital Inc., RBS Securities Inc., Scotia Capital (USA) Inc. and UBS Securities LLC were the bookrunners.

The deal was done under Rule 144A and Regulation S.

Exelon Generation was last in the market with a $900 million issue of notes due in 2020 and 2041 on Sept. 27, 2010. The 4% 10-year notes from that sale were priced at 150 bps over Treasuries while a 5.75% bond due 2041 priced at 208 bps over Treasuries.

The energy producer is a subsidiary of Chicago-based Exelon Corp.

City National's 10-year

City National Bank sold $150 million of 5.375% 10-year subordinated bank notes (A2/BBB+/) at a spread of 377.2 bps over Treasuries, a source away from the trade said.

The bookrunners were Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The financial services unit of Los Angeles-based bank holding company City National Corp. was last in the market with a $130 million sale of subordinated notes in two tranches on Aug. 17, 2009.

Network Rail's short bond

Network Rail Infrastructure Finance priced $1.5 billion of 0.625% three-year notes to yield mid-swaps plus 2 bps, a market source said.

The notes (Aaa/AAA/AAA) were priced under Rule 144A and Regulation S.

The bookrunners were Barclays, Deutsche Bank Securities Inc., Goldman Sachs and JPMorgan.

The government-operated rail infrastructure company in Great Britain is based in London.

Zions Bank prices via auction

Zions Bancorporation sold $158.45 million of 4% two-year senior notes via an online auction, according to an FWP filing with the Securities and Exchange Commission.

The deal size was initially announced at $200 million, according to a Monday press release.

The notes (/BBB-/BBB-) were priced at 97.5 to yield 4.693%, which was the minimum bid allowed.

Deutsche Bank was the bookrunner, and Zions Direct was the auction agent.

Proceeds are being used for general corporate purposes including the possible redemption of series D preferred stock held by the Treasury or senior floating-rate notes due on June 21.

The bank holding company is based in Salt Lake City.

Alberta plans $500 million

The Province of Alberta (Aaa/AAA/) plans to price a $500 million U.S. dollar-denominated offering of five-year notes on Thursday, an informed bond source said.

The notes due June 2017 are being offered under Rule 144A and Regulation S.

Bank of America Merrill Lynch, CIBC World Markets Inc., RBC Capital Markets Corp. and TD Securities Inc. are the lead managers.

Merrill Lynch widens

The secondary saw Merrill Lynch's 6.875% notes due 2018 tighten 5 bps to 430 bps bid near the end of New York's session.

On April 22, 2008, the bank priced the $5.5 billion of 10-year notes at 320 bps over Treasuries.

Morgan Stanley

Also in the secondary, Morgan Stanley's notes due 2019 tightened 13 bps to 456 bps bid, according to a market source.

The bank priced $3 billion of the 5.625% 10-year notes at 225 bps over Treasuries in 2009.

Cristal Cody contributed to this review

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