Carnival prices after widening guidance; Berkshire Hathaway, Duke Energy flat; market quiet

By Crsital Cody and Aleesia Forni

Virginia Beach, Oct. 9 - Carnival Corp. came to the primary market on Wednesday, as fears concerning the debt ceiling continued to weigh on investors.

The company sold an upsized $700 million of notes due 2020 at Treasuries plus 195 basis points.

The deal was sold at the tight end of talk, though pricing came in 20 bps wider than initial guidance.

This new issue comes on the heels of many deals that have seen strong investor interest in recent weeks despite the turmoil in Washington.

"I think this shows that investors aren't just jumping into anything," one market source said late Wednesday.

Carnival's deal brings the week's total to roughly $3.2 billion.

Syndicate sources had expected about $10 billion of new paper for the week, but the total is likely to come in far lower than original predictions.

Secondary market activity stayed quiet over the session as markets contemplated the continued U.S. government shutdown and upcoming potential of default, sources said.

"Nothing's happening," one trader said. "Everybody is sitting on their hands because of everything going on, or not going on."

Financial paper was slightly weaker on the day, while new issuance held onto gains from the previous day, sources said.

"There's still a market going on, but nothing's really traded," a source said.

Carnival's 3.95% senior notes due 2020 were not immediately seen in aftermarket trading, a source said.

Duke Energy Corp.'s 3.95% notes due 2023 traded unchanged since tightening 5 bps after pricing on Tuesday, a trader said late Wednesday afternoon.

Berkshire Hathaway Finance Corp.'s 2.9% senior notes due 2020 were mostly flat on the day.

The Markit CDX North American Investment Grade series 21 index firmed 1 bp to a spread of 83 bps.

Carnival new issue

Thursday's primary saw Carnival price an upsized $700 million issue of senior notes (Baa1/BBB+/) due Oct. 15, 2020 with a spread of Treasuries plus 195 bps, according to an FWP filing with the Securities and Exchange Commission and a market source.

The notes priced at the tight end of talk, though pricing came 20 bps wider than initial guidance.

Pricing was at 99.74 to yield 3.993%.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp., Mizuho Securities USA Inc. and UBS Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The issuer is a Miami-based unit of London-based cruise operator Carnival plc.

Duke holds

Duke Energy's 3.95% notes due 2023 (Baa1/BBB/BBB+) traded at 130 bps bid in Wednesday's session, unchanged from where the notes traded at 130 bps bid, 125 bps offered on Tuesday, according to a trader.

Duke Energy sold $400 million of the notes at a spread of Treasuries plus 135 bps.

The diversified energy company is based in Charlotte, N.C.

Berkshire flat

Berkshire Hathaway 2.9% senior notes due 2020 (Aa2/AA/) were seen last trading early Wednesday at 99.8 to 100.2, or 84 bps bid, a trader said late afternoon.

"The market's been pretty slow," the trader said. "The last trade was at 11 [a.m.]."

The company sold $550 million of the notes on Tuesday at 99.805 to yield 2.931%, or a spread of Treasuries plus 90 bps.

The firm is a subsidiary of Omaha-based holding company Berkshire Hathaway Inc.

Bank/brokerage CDS levels down

Investment-grade bank and brokerage CDS levels declined on Wednesday, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 109 bps bid, 113 bps offered. Citigroup Inc.'s CDS costs closed unchanged at 98 bps bid, 102 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 91 bps bid, 95 bps offered. Wells Fargo & Co.'s CDS costs ended 1 bp tighter at 60 bps bid, 64 bps offered.

Merrill Lynch's CDS costs firmed 1 bp to 107 bps bid, 112 bps offered. Morgan Stanley's CDS costs tightened 2 bps to 136 bps bid, 140 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 131 bps bid, 135 bps offered.

Paul Deckelman contributed to this review

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