JPMorgan, Kinder Morgan sell as tone sours; secondary active as Carpenter bonds trade tighter

By Aleesia Forni and Andrea Heisinger

New York, Feb. 21 - The steady stream of bonds pricing in the high-grade market continued on Thursday with trades by JPMorgan Chase & Co., Kinder Morgan Energy Partners LP and Carpenter Technology Corp.

JPMorgan sold $2.5 billion of three-year notes in two tranches in a follow-up to its $6 billion offering in three parts in January. Thursday's trade included a three-year floating-rate note and a three-year fixed-rate note.

A market source said that JPMorgan was likely in the market for the second time in a little more than a month to "get out ahead of Treasury [yield] increases."

Yields on Treasury bonds are expected to rise in the "near future," the source added.

Pipeline operator Kinder Morgan priced $1 billion of bonds. The sale included $600 million of 10-year bonds and $400 million of 30-year bonds. The terms of the sale were not available at press time.

Carpenter Technology sold $300 million of 10-year notes in a quick trade.

Thursday saw a "not great" tone, said one market source, noting that while JPMorgan's trade was opportunistic, it "did really well."

Friday has at least one issuer looking to price bonds, although that could turn into a no-go call in the morning depending on if market conditions improve, the market source said.

Trading volume in the secondary market reached $11.8 billion on Thursday, one market source said. The Markit CDX Series 18 North American Investment Grade index widened 3 basis points to a spread of 89 bps.

The source added that trading "seemed more active [Thursday], generally speaking."

Spreads in the secondary market were weaker overall during the session, though the new issues from JPMorgan and Carpenter Technology were trading tighter near New York's close.

Carpenter Technology's new notes were quoted 18 bps better late in the day, while JPMorgan's fixed-rate notes firmed 1 bp.

JPMorgan sells short bonds

JPMorgan Chase sold $2.5 billion of three-year notes (A2/A/A+) in two parts, a source away from the trade said.

A $1.75 billion tranche of three-year floating-rate notes priced at par to yield Libor plus 62 bps.

The second part was $750 million of 1.125% three-year bonds sold at a spread of Treasuries plus 77 bps. The notes were quoted at 76 bps bid, 74 bps offered.

J.P. Morgan Securities LLC was the bookrunner.

The New York-based financial services company was last in the U.S. bond market with a $6 billion sale in three tranches on Jan. 17.

Carpenter's 10-year

Carpenter Technology sold $300 million of 4.45%10-year senior notes (Baa3/BBB/) to yield 250 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

BofA Merrill Lynch and JPMorgan were the bookrunners.

Proceeds are being used to repay $100 million of 6.625% senior notes due in May, including interest, with the remainder for general corporate purposes including pension contributions of up to $165 million.

The company was last in the U.S. bond market with a $250 million sale of 5.2% 10-year notes priced at 230 bps over Treasuries on June 27, 2011.

The maker of metal and steel products is based in Reading, Pa.

Carpenter bonds firm

Carpenter Technology's notes were trading 18 bps better near the end of Thursday's trading, one market source said.

"Looks like there were quite a few looking for bonds," the source, adding that spreads "kept getting tighter."

The source saw bids starting at 245 bps before tightening to 238 bps bid later in the session.

The bonds firmed to 232 bps bid near the day's end.

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