Oglethorpe Power, Achmea Hypotheekbank sell bonds; issuance light; Oglethorpe tightens

By Andrea Heisinger

New York, Oct. 26 - Oglethorpe Power Corp. and Achmea Hypotheekbank NV priced investment-grade bonds on a quiet Monday. The week is expected to have light issuance, sources said, as many companies do not need to issue bonds.

The focus remained mostly on issues from other countries. Japan Finance Corp. announced an offering of notes in a filing with the Securities and Exchange Commission, and pricing is expected in the coming days, a source said.

Netherlands-based issuer Achmea Hypotheekbank sold $3.25 billion of notes in two tranches. The sale consisted of $2.75 billion of five-year notes and $500 million of five-year floaters.

Oglethorpe Power sold $400 million of 30-year first mortgage bonds in the Rule 144A market.

These bonds tightened once hitting the secondary, a trader said. He quoted them at about 5 to 10 basis points improved from pricing.

That bond represented some of the only action in the secondary market. Bank bonds continued to trade actively following mixed third-quarter earnings announcements in the past two weeks.

Spreads tightened for the second day in a row as Treasury yields widened. The five-year note was out 6 basis points to yield 2.5% while the 10-year note widened by 7 bps to yield 3.56%.

Netherlands' Achmea prices $3.25 billion

Zeist, the Netherlands-based Achmea Hypotheekbank sold $3.25 billion of notes in two tranches backed by the government of the Netherlands late in the afternoon, a syndicate source close to the deal said.

A $2.75 billion tranche of 3.2% five-year notes priced at a spread of mid-swaps plus 35 bps. They were talked at the same spread.

The $500 million tranche of five-year floating-rate notes priced at par to yield three-month Libor plus 35 bps. This tranche also priced in line with guidance.

Citigroup Global Markets, Deutsche Bank Securities, Morgan Stanley, Rabobank and RBS Securities ran the books.

The issuer is a banking subsidiary of financial services company Achmea Holding, NV.

Oglethorpe Power sells mortgage bonds

Electric utility Oglethorpe Power sold $400 million of 5.95% 30-year first mortgage bonds via Rule 144A at Treasuries plus 160 bps, a market source away from the deal said.

Goldman Sachs & Co. and J.P. Morgan Securities Inc. ran the books for the company based in Tucker, Ga.

Week's issuance to be light

Syndicate desks nearly all reported expectations for a light week for new deals, despite many companies and banks coming out of earnings.

"We should be pretty quiet," one source said. "I wouldn't imagine anyone would have anything too exciting [this week]."

"There are some things Wednesday, Thursday," another source said.

The amount of opportunistic issuance done in the past few months may also factor into the small amount of issuance until the end of the year.

"There are some names that have mandates to issue before the end [of 2009]," a source said. "A lot of people got ahead and have a big cash reserve. They just don't need to issue right now."

Japan Finance on tap

Japan Finance announced a sale of guaranteed bonds, according to a 424B5 filing with the Securities and Exchange Commission.

A source close to the sale said "it is not being driven out of the U.S." and was not sure when it was pricing.

Bookrunners are Barclays Capital, Bank of America Merrill Lynch and JPMorgan.

Proceeds will go toward the operations of the Japan Bank for International Cooperation.

The notes are guaranteed by the Japanese government.

The issuer provides financing to Japanese businesses and banks and is based in Tokyo.

Oglethorpe bond trades in

The new 5.95% mortgage bond due 2039 from electric company Oglethorpe Power was tighter by 5 to 10 bps late in the day, a trader said.

The bond was quoted at 154 bps bid, with an offer of 150 bps. It sold at 160 bps over Treasuries.

Industrial trading 'very quiet'

The trend remains unbroken for the industrial sector of the high-grade secondary - there is very little activity, a trader said late Monday.

"Nothing's really changed," he said. "All of the action is in [emerging market] bonds from other countries."

There was not much in the way of even those issues on Monday.

"I don't know why no one did anything [today]," he said. "We're still in earnings. I would imagine it will pick up tomorrow."

Oglethorpe Power represented one of the only entrants into the industrial side of the market in the last couple of days.

"It's very slow," the trader said.

Spreads virtually disappeared in the last couple of weeks as earnings blackouts severely limited any domestic companies from issuing. Large banks coming out of blackout were about the only takers.

Even in the financial sector, there was little to talk about on Monday. When asked what was going on that side of the secondary, a trader said "nada."

Dow Chemical, banks lead trading

Bonds from Dow Chemical Co. and various large banks led the high-grade market in trading volume by late in the afternoon.

Dow Chemical bonds have been popular with investors recently due to their performance and recognizable name, a trader said.

The industrial's 8.55% bond due 2019 was active, trading at 296 bps over Treasuries.

A bond from Bank of America Corp. trailed the Dow notes. The bank's 7.375% bond due 2014 was quoted at Treasuries plus 228 bps.

Outstanding issues from Citigroup Inc., Morgan Stanley and Wells Fargo & Co. were also trading actively. They have each announced third-quarter earnings in the past two weeks.

A 5% bond due 2014 from Wells Fargo was one of the day's biggest movers. The bank reported a positive third quarter the previous week, moving the bond about 35 bps tighter than a week ago. It was quoted at 157 bps.

A 5.4% bond due 2016 from home improvement chain Home Depot Inc. was one of the few non-bank bonds trading actively. The company announced on Friday that it would offer trade-ins on holiday lights and power drills during the coming holiday season.

The bond was quoted at Treasuries plus 154 bps.

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