IBM, Charles Schwab, HRPT Properties Trust, FPL Group Capital price deals; high-grade stays stable

By Andrea Heisinger

Omaha, Sept. 11 - A steady flow of investment-grade new issues continued Tuesday with International Business Machines Corp., Charles Schwab Corp., HRPT Properties Trust, and FPL Group Capital Inc. all pricing.

Bank of America Corp. reopened its recent five-year floating-rate senior notes, adding $100 million to the $550 million already issued. The notes have a coupon of three-month Libor plus 50 basis points and priced at par.

IBM priced $3 billion in 10-year 5.7% notes at a spread of Treasuries plus 139 basis points. They had a price of 99.654 and yield of 5.746%. Price talk was in the 140 bps area, an informed source said.

Charles Schwab had $250 million in 10-year 6.375% medium-term senior notes that priced at a spread of Treasuries plus 205 bps with a price of 99.714 and yield of 6.414%.

Also pricing was HRPT with $250 million of 6.65% senior unsecured notes due 2018 that had a spread of Treasuries plus 240 bps. The notes have a price of 99.146 with a yield of 6.768.

FPL had its second new issue of the week, this time with $350 million in 60-year 7.45% junior subordinated debentures that have a price of $25 per security.

The company's issue on Monday was $250 million of 60-year notes.

BlackRock, Hasbro coming

An issue of notes from BlackRock, Inc. was announced, and will price in the next couple of days, sources said. Bookrunners for the issue of 10-year notes will be Citigroup Global Markets Inc., Morgan Stanley & Co. Inc. and Wachovia Capital Markets LLC.

Set to price Wednesday is an issue from Hasbro, Inc. that was announced Monday. The two-tranches of 10-year and 30-year notes did not price Tuesday because traders were not able to contact the issuer, an informed source said.

There has not been any issue size or price talk, the source said.

Bookrunners are Banc of America Securities Inc. and Citigroup Global Markets Inc.

Terms of a $200 million two-tranche issue from Connecticut Light and Power Co. were announced Tuesday after it priced late in the day Monday. The $100 million tranches were of 10-year and 30-year first mortgage bonds.

The 10-year 5.75% bonds priced at a spread of Treasuries plus 145 bps with a price of 99.764 and yield of 5.782%.

The 30-year 6.375% bonds priced at a spread of Treasuries plus 175 bps with a price of 99.765 and yield of 6.393%.

More deals expected

"We saw some action today," one trader said of the amount of new issues. "It's been relatively stable today."

Spreads have been wider recently, and new issue premiums higher, due to conditions in other sectors of the market spilling over into investment grade.

"Yeah, they're still a little wide," a market source said. "They've tightened up a little."

A healthy volume of new issues will continue Wednesday and Thursday, sources said, with the normal slowdown at the end of the week.

"It's been a little better today," a market source said. "Stocks have performed better. We can expect more of the same tomorrow."

New deals around issue in trading

In the secondary market, a trader noted the pricing of Charles Schwab deal at 205 bps off Treasuries, characterizing it as "a small deal - I haven't seen much trading in that."

He saw the two tranches of 6% notes due 2017 priced Monday at 170 bps over by arms of American Express having tightened slightly to 169 bps over.

He also saw the new Bank of America 5 3/8% global notes due 2012, which priced last week at 123 bps over, trading "right around issue," at 125/122 bps over, while B of A's new 6½% globals due 2037, which priced at the same time at 175 bps, were trading Tuesday at 178/173 bps.

Overall, he said that he had seen some "decent two-sided markets" on "some of the more generic paper" now trading around.

But he said that there was "nothing to huge to speak of that I saw come my way."

Another trader characterized the market as "just so painful, because everything is so wide - you look at a piece of paper and you say 'gosh, this came three months ago at +180 [bps], and now, it's being offered at +230, and that should be attractive' - and then you look at where Treasuries are, and you say 'no, it really isn't.'

"And I think that's a problem on the short end, too - a lot of the stuff on the short end has widened out so much on spread versus Treasuries, and you think to yourself 'Gee, AAA paper at +120 - that sounds pretty good.' But then you look at the two-year, and that gets you barely to 5% [in yield] - and Libor is better than that.

"So it's a difficult situation right now, because things are definitely still widening out. I don't see paper tightening in a whole lot."

The trader added: "If I were a [corporate] treasurer, I would be hitting the market right now, without a doubt."

Yet another trader agreed, counseling "get the money while you can."

Despite the overall widening trend, one name which actually has been doing some tightening, meantime, is the new Lowe's Cos. Inc. $1.3 billion issue, which priced in three parts last week. The second trader saw the $250 million of 6.10% notes due 2017, which priced at 160 bps over Treasuries, trading on Friday and Monday in a "high 150ish range, 157-158 [bps]" - and trading as tightly on Tuesday as a 155/152 bps context.

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