Swedish Export Credit, EIB hit primary with new issues; bonds 'lackluster' in secondary trading

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 28 - The high-grade primary market was quiet on Wednesday, though the session did see two new investment-grade issues from across the pond.

Swedish Export Credit Corp. and the European Investment Bank sold new deals totaling $4.25 billion on Wednesday.

European Investment Bank came to the primary selling priced $3 billion of 1.125% three-year notes with a spread of Treasuries plus 36.35 basis points, a market source said.

There was also a $1.25 billion offering from Swedish Export Credit. The bank priced the 0.625% notes due Sept. 4, 2015 with a spread of Treasuries plus 24.05 bps.

Light primary activity is expected for the remained of the week, as many players are away from their desks during the days leading up to the long Labor Day weekend.

Sources are predicting this late-summer lull to last only until the end of the month, with activity expected to pick back up during the post-holiday week.

The Markit CDX Series 20 North American Investment Grade index recovered some ground on Wednesday. It tightened 1 bp to a spread of 83 bps.

"Spreads in general look lackluster," one trader said. "Quiet going into [the] Labor Day holiday."

Swedish Export Credit's newly priced notes were not seen in the secondary market, traders said in the late afternoon.

Santander Holdings USA Inc.'s 3.45% senior notes due 2018 eased 1 bp on the day, traders said.

EIB sells $3 billion

The primary market saw the European Investment Bank sell $3 billion of 1.125% three-year notes with a spread of Treasuries plus 36.35 bps, a market source said Wednesday.

The full terms were not available at press time.

Deutsche Bank Securities Inc., HSBC Securities and J.P. Morgan Securities LLC are the bookrunners.

The funding arm of the European Union is based in Kirchberg, Luxembourg.

SEK prices notes

Meanwhile, Swedish Export Credit sold $1.25 billion of 0.625% notes due Sept. 4, 2015 with a spread of Treasuries plus 24.05 bps, according to a FWP filing with the Securities and Exchange Commission.

Pricing was at 99.987 to yield 0.6315%.

The notes were sold under the company's SEC-registered U.S. medium-term note program.

Credit Suisse Securities (Europe) Ltd., Goldman Sachs International and Morgan Stanley & Co. International plc acted as the lead managers.

Based in Stockholm, Swedish Export Credit is the lender to Sweden's export industry.

Santander eases

Santander's 3.45% senior notes due 2018 went out at 165 bps bid, 162 bps offered, a trader said.

The notes (Baa2/BBB/BBB) traded earlier in the day at 165 bps bid and 164 bps bid, 163 bps offered, according to other traders.

Boston-based Santander Holdings USA, the parent company of Sovereign Bank and a subsidiary of Spain's Banco Santander, SA, sold $500 million of the notes at a spread of Treasuries plus 180 bps on Aug. 21.

CDS costs decline

Investment-grade bank and brokerage CDS costs fell on Wednesday, a market source said.

Bank of America Corp.'s CDS costs dropped 2 bps to 111 bps bid, 115 bps offered. Citigroup Inc.'s CDS costs firmed 3 bps to 103 bps bid, 107 bps offered. JPMorgan Chase & Co.'s CDS costs declined 2 bps to 89 bps bid, 94 bps offered. Wells Fargo & Co.'s CDS costs fell 2 bps to 64 bps bid, 68 bps offered.

Merrill Lynch's CDS costs ended 2 bps lower at 104 bps bid, 111 bps offered. Morgan Stanley's CDS costs firmed 2 bps to 142 bps bid, 147 bps offered. Goldman Sachs Group, Inc.'s CDS costs fell 3 bps to 133 bps bid, 137 bps offered.

Paul Deckelman contributed to this review

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