Campbell's, Wal-Mart, Lloyds, Digital Realty, Fidelity price bonds; Altria solid in secondary

By Andrea Heisinger and Cristal Cody

New York, June 30 - Campbell Soup Co., Wal-Mart Stores Inc., Lloyds Banking Group plc, Digital Realty Trust LP and Fidelity Investments priced bond issues on a Wednesday that will likely be the busiest day of the week for new deals.

Things were not looking good the previous day, but a source said that if things looked up enough at the open Wednesday, there were a handful of deals ready to go.

"It was a little volatile, but I guess if anyone can get it done, it's Wal-Mart, right?" the source said.

Jobs and economic data made things slightly unstable, but some issuers may have needed to get bonds priced either before the July 4 holiday or the end of June.

Wal-Mart had the biggest offering of the day with its $3 billion sale in three tranches. The 10-year notes had the most interest from buyers, a source said. The tranches priced tighter than talk as well.

Campbell Soup was one of the first sales to be priced. The processed food company sold $400 million of seven-year notes in its first deal since June 2009.

Real estate investment trust Digital Realty sold an upsized $375 million in a private offering of five-year notes under Rule 144A and Regulation S. The size was initially $250 million.

A sale that went overnight from Lloyds Banking Group priced later in the day. The London-based financial services company priced an upsized $750 million of 40-year public income notes, after announcing it would do a minimum amount of $300 million on Tuesday.

Fidelity upsized its sale to $400 million from $250 million of notes due in late 2040. They were priced under Rule 144A.

There isn't much activity expected in the primary market for the remainder of the week, a market source said, adding that if issuers are going to price bonds, they will do it on Thursday.

"We're seeing it wind down," the source said.

High-grade bonds from Altria Group, Inc. stayed strong in secondary trading on investors' relief that the federal government will not seize tobacco profits to fund smoking cessation programs.

Also in trading, industrials were active with index account buying, a source said.

In new deals from Wednesday, Campbell Soup's new investment-grade debt firmed in the secondary, according to a source.

Ending the day, overall investment-grade Trace volume fell about 1% to nearly $11.5 billion, a source said.

The CDX Series 14 North American investment-grade index eased 1 basis point to a mid bid-asked spread of 123 bps, according to a market source.

Yields on the benchmark 10-year Treasury note stayed below 3% for a second day, falling 2 bps to 2.93%. The yields on 10-year notes fell below 3% on Tuesday for the first time since April 2009.

Yields on the two-year note on Wednesday were unchanged at 0.6%.

Yields on 30-year Treasury bonds firmed 4 bps to 3.89%.

Wal-Mart prices $3 billion

Wal-Mart Stores priced $3 billion of senior unsecured notes (Aa2/AA/AA) in three tranches late in the afternoon, a source away from the sale said.

The $750 million of 2.25% five-year notes sold at a spread of Treasuries plus 53 bps. They were initially whispered in the 60 bps area, a source said.

A $1.5 billion tranche of 3.625% 10-year notes priced at a 70 bps over Treasuries spread. They were whispered in the 80 bps area.

The $750 million tranche of 4.875% 30-year bonds priced at to yield Treasuries plus 108 bps. Initial talk was in the 115 bps area.

Wal-Mart last priced bonds in a $2 billion deal in five and 30-year tranches on March 24. The five-year notes priced at 45 bps over Treasuries, and the 30-year bonds at 95 bps.

Bookrunners were Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities. Proceeds are being used for general corporate purposes.

The discount retailer is based in Bentonville, Ark.

Campbell's prices seven-years

Campbell Soup priced $400 million of 3.05% seven-year senior unsecured notes (A2/A/A) by mid-afternoon to yield Treasuries plus 65 bps, according to an FWP filing with the Securities and Exchange Commission.

They were talked in the 65 bps area and priced in line with that, a source said.

The notes were seen trading early afternoon at 63 bps bid, 58 bps offered.

The securities immediately firmed in the secondary, another source said.

Barclays Capital, BNP Paribas Securities and J.P. Morgan Securities were bookrunners.

Proceeds will be used to repay short-term debt, reduce or retire debt and for other general corporate purposes, including acquisitions.

The company's last bond sale was $300 million of 3.375% notes due 2014 priced on June 26, 2009.

The processed food company is based in Camden, N.J.

Volatility doesn't stop issuance

The tone of the investment-grade bond market wasn't necessarily any better than Tuesday, but issuers forged ahead anyway, with some upsized and large sales.

"I don't know, maybe they were just tired of waiting?" one market source said. He notes that most of the day's issuers were highly-rated, meaning they could "afford a little extra concession."

The Digital Realty, Lloyds Banking Group and Fidelity sales were all upsized, at least slightly. The Wal-Mart sale priced tighter than talk.

Issuance was slow for the first two days of the week, with only one deal pricing. One source said that was due to lack of supply and not the market tone.

At least one source on Wednesday was a little surprised to see so many deals "come out of the woodwork."

"I don't really know where they were hiding, but obviously they needed to sell debt for some reason. Today was as good as any."

Lloyds Banking prices first retail notes

Lloyds Banking Group sold an upsized $750 million, or 30 million shares, of 7.75% 40-year public income notes (A1/A/AA-) at par of $25, an informed source said. The sale went overnight from Tuesday.

They priced in line with talk in the 7.75% area. When the sale was first announced, it was at a minimum size of $300 million and it was expected to grow.

This is the company's first time issuing retail notes, a source said.

Citigroup Global Markets was the bookrunner.

Proceeds are being used for general corporate purposes.

The financial services company is based in London.

Digital Realty sells upsized five-year deal

Digital Realty Trust sold an upsized $375 million of 4.5% five-year senior unsecured notes (Baa2/BBB/BBB) by late afternoon at 275 bps over Treasuries, a source close to the sale said.

The size was increased from an initial $250 million, the source added.

They were sold under Rule 144A and Regulation S. The deal is guaranteed by parent company Digital Realty Trust Inc.

Bookrunners were Citigroup Global Markets and Credit Suisse Securities Inc.

Proceeds are going to fund a portion of the acquisition of a five-property data center portfolio in California, Arizona and Virginia or to acquire additional properties, fund development, or redevelopment opportunities and for general working capital purposes.

The real estate investment trust is based in San Francisco.

Fidelity sells bonds privately

Fidelity Investments sold an upsized $400 million of 6.5% bonds due 2040 (A2/A+) late in the day to yield Treasuries plus 262.5 bps, a source who worked on the sale said.

The size was increased from $250 million, the source said.

They were sold under Rule 144A, with Citigroup Global Markets and J.P. Morgan Securities as bookrunners.

The mutual fund is based in Boston.

Altria tighter

The high-grade bonds from Philip Morris USA owner Altria Group stayed strong after rallying on Monday's U.S. Supreme Court decision, sources said.

The court rejected the federal government's motion for tobacco profits to be used to fund a smoking cessation program and other efforts.

Altria's 9.7% notes due 2018 (Baa1/BBB) traded at 292 bps early Tuesday and ended the day at 269 bps, with not much change on Wednesday, a source said.

The 9.7% notes traded at 320 bps over Treasuries a week ago on June 24, according to a source.

Also, Altria's 9.25% notes due 2019 firmed in trading and were last seen at 280 bps, a source said.

Industrials 'sideways'

Secondary trading in the industrials sector was active, a trader said.

"Industrials were generally trading sideways," the trader said. "There was lots of index-account buying."

Anadarko Petroleum Corp.'s 5.95% notes due 2016 were slightly firmer at 660 bps on Wednesday, compared to a quote of 666 bps the day before, a source said.

Anadarko is under scrutiny after Moody's Investors Service cut the company's rating to below investment grade in mid-June over liability concerns. The Woodlands, Texas-based company has 25% ownership of the oil well that continues to gush oil into the Gulf of Mexico.

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