Noble Holding, BPCE price as market tone settles; Apache bonds widen 5 basis points

By Andrea Heisinger and Cristal Cody

New York, Jan. 31 - Noble Holding International Ltd. and Groupe BPCE sold new high-grade paper on Monday as the week got off to a cautious start.

The situation in Egypt continued to make potential issuers and investors leery of tapping the market, a source said.

"I don't think much changed [over the weekend]," he said.

Noble Holding priced $1.1 billion in three parts just ahead of the market close. It was joined in the market by French bank BPCE, which also sold $1.1 billion but in the form of three-year floating-rate notes.

The market tone was solid enough for these two issuers to come into the market, but one source questioned how many others were on the sidelines.

"I'm sure some held off, but I don't know what we have coming up this week," she said.

Previous estimates were for around $20 billion of new paper for the week.

The situation overseas at first unnerved the high-grade market on Friday, but sentiment seems to have settled over the weekend.

"They [investors] aren't really bothered," a syndicate source said. "It's not in our area."

More domestic companies are expected to enter the market as they come out of earnings blackout, the source added.

Oil and gas company Apache Corp.'s bonds widened another 5 basis points in trading on Monday on concerns over how the Egyptian situation would affect company production, sources said.

In the secondary market, Noble's three tranches of bonds firmed in trading, with the five-year notes 5 points tighter on the bid side, according to sources.

The Markit CDX Series 14 North American investment-grade index came in 2 bps to a spread of 84 bps on Monday, according to Markit Group Ltd.

While few new deals were sold on Monday, trading volume was high. Overall investment-grade Trace volume jumped more than 30% to about $14 billion, a market source said.

Treasuries shed Friday's gains on Monday on stronger economic data as the markets stayed attuned to the unrest in Egypt.

The 10-year benchmark note yield rose 5 basis points to 3.37%. The 30-year bond yield ended the day at 4.57% from 4.53%.

Noble sale oversubscribed

Noble Holding International priced $1.1 billion of senior notes (Baa1/A-/A-) in three parts, a source close to the sale said.

There was about $6 billion on the books, the source said, adding, "It was the only game in town [...] and everyone wanted in on it."

The $300 million of 3.05% five-year notes priced at a spread of Treasuries plus 110 bps. The notes sold at the tight end of guidance in the 115 bps area, the source said.

A second part was $400 million of 4.625% 10-year notes priced at 125 bps over Treasuries. Talk was in the 130 bps area and the notes priced at the tight end of that.

The third part was $400 million of 6.05% 30-year bonds that sold at Treasuries plus 150 bps. The bonds were talked in the 155 bps area and priced at the tight end of that.

Barclays Capital Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are going to be transferred to Noble-Cayman as advances, distributions, repayment of intercompany debt or a combination of these. The proceeds will then be used to repay debt under an existing revolving credit facility, to repay a portion of debt under Bully I and II credit facilities and for general corporate purposes, including a 2011 capital expenditure program.

The sale is guaranteed by Noble Corp. (Cayman Islands).

In secondary trading, the five-year notes firmed to 105 bps bid, 102 bps offer, a trader said.

The tranche of 10-year notes was slightly stronger at 123 bps bid, 120 bps offer.

The 30-year bonds traded at 149 bps bid, 146 bps offer.

The offshore drilling contractor is based in Grand Cayman.

BPCE's floaters

France's BPCE sold $1.1 billion of three-year floating-rate notes to yield Libor plus 180 bps, an informed source said.

The notes (Aa3/A+/A+) sold at 99.846 with a coupon of Libor plus 175 bps. They sold under Rule 144A.

Barclays Capital Inc., J.P. Morgan Securities LLC, Natixis and RBS Securities LLC were bookrunners.

The retail bank is based in Paris.

Apache weaker

Apache's bonds continued to widen in trading on Monday, sources said.

"About 5 bps wider today," a trader said.

On Friday, Apache's bonds had widened 5 bps to 10 bps as the anti-government protests in Egypt grew. Apache receives about 30% of its production revenue from Egyptian operations, according to the company.

Apache said in a statement on Thursday that its oil and gas production operations in Egypt are unaffected by the protests.

Apache's 5.1% bonds due 2040 traded on Monday at 110 bps bid, 105 bps offer. The 5.25% bonds due 2042 were seen at 112 bps bid, 106 bps offer.

Apache's bonds due 2021 were seen at 87 bps bid, 82 bps offer, a trader said.

Houston-based Apache is a natural gas and crude oil exploration and development company.

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