Toyota Motor Credit, Federal Realty price as earnings slow volume; Goldman Sachs bonds active

By Aleesia Forni and Andrea Heisinger

New York, July 16 - The week got off to a tentative start with new deals from Toyota Motor Credit Corp. and Federal Realty Investment Trust in the primary on Monday.

Toyota sold $1.5 billion of three-year notes, while Federal Realty priced $250 million of 10-year notes to help repay debt.

Toyota's notes traded 2 bps tighter late in Monday's session.

Kimco Realty Corp. priced an upsized $225 million of $25-par 5.5% perpetual redeemable preferred stock shares by early afternoon at the tight end of guidance.

Citigroup Inc. announced second-quarter earnings at the top of the day, which were down from the same quarter in 2011, but beat some analyst expectations, a source said. The bank reported earnings of $18.6 billion for the quarter which was a 10% drop from the previous year.

"People seemed to view it in a positive light," a market source said after the close.

Tuesday will see a Q2 announcement from Goldman Sachs Group Inc.

The estimates of $5 billion to $10 billion of issuance for the week held on Monday, a syndicate source said. "With earnings, we're not going to see much."

Tuesday is expected to be "pretty quiet," the source added.

In the secondary market, the bonds due 2037 from Goldman Sachs traded actively on Monday, tightening 18 bps compared to last week's levels.

Investment-grade bank and brokerage credit default swaps costs rose on Monday, according to a market source.

Bank of America's CDS costs widened 2 bps to 247 bps bid, 252 bps offered. Citi's CDS costs rose 2 bps to 257 bps bid, 250 bps offered. J.P. Morgan's CDS costs widened 2 bps to 121 bps bid, 126 bps offered.

Brokers were also wider. Merrill Lynch's CDS costs were 3 bps wider at 258 bps bid, 268 bps offered. Morgan Stanley's CDS costs rose 2 bps to 345 bps bid, 350 bps offered. Goldman Sachs' CDS costs also widened 1 bps to 258 bps bid, 263 bps offered.

Toyota Motor short bonds

Toyota Motor Credit sold $1.5 billion of 0.875% three-year medium-term notes (Aa3/AA-/) to yield Treasuries plus 58 bps, an informed source said.

A trader saw the bonds at 56 bps bid, 54 bps offered near the end of Monday's session.

The deal was sold tighter than guidance in the 70 bps area, the source said. There was roughly $3 billion of demand on the books, the source added.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The funding arm of Toyota is based in Torrance, Calif.

Federal Realty's $250 million

Federal Realty sold $250 million of 3% 10-year notes (Baa1/BBB+/A-) to yield Treasuries plus 170 bps, a market source said.

The notes were priced tighter than talk in the low 200 bps area, the source said. There was "just under $2 billion" of demand for the trade.

Bookrunners were Citigroup Global Markets LLC, RBC Capital Markets LLC and Wells Fargo Securities LLC.

Proceeds are being used to repay debt under a revolving credit facility and for general corporate purposes, including funding potential acquisition opportunities or a redevelopment pipeline.

The real estate investment trust for retail and mixed-use buildings is based in Rockville, Md.

Kimco's preferred deal

Kimco Realty sold an upsized $225 million of class J cumulative redeemable preferred stock shares at par of $25, according to an FWP with the Securities and Exchange Commission.

The size of the sale was increased from the minimum of $150 million, a source said. There is no over-allotment option.

A trader said price talk was 5.625% to 5.75%. It was then revised to 5.5% to 5.625% and priced at the tight end of that range.

The preferreds will be issued as depositary shares representing a 1/1,000th interest in the class J stock.

Kimco will apply to list the new series of preferreds on the New York Stock Exchange.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Joint lead managers were J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Proceeds will be used to redeem the company's class F preferreds on or about Aug. 15 and for general corporate purposes.

Kimco is a New Hyde Park, N.Y.-based real estate investment trust.

Goldman Sachs active

Goldman Sachs' 30-year bond due 2037 was among the day's most actively traded deals, closing the session at 404 bps bid, 18 bps tighter from Friday's levels.

Goldman priced the $2.5 billion 6.75% bond at 190 bps over Treasuries in September 2007.

Citi widens

In other trading, Citigroup's 8.5% 10-year notes widened 15 bps compared to Friday's levels to 265 bps bid.

The bank priced $1 billion notes due 2019 at Treasuries plus 437.5 bps on June 11, 2009.

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