Lack of new deals blamed on Fed meeting; Cogdell plans preferreds; Sprint Nextel bonds widen

By Andrea Heisinger and Cristal Cody

New York, Dec. 14 - New issuance fell to zero Tuesday after a robust day on Monday and predictions that more sales were forthcoming.

Cogdell Spencer Inc. announced it will sell perpetual preferred stock. The sale is expected to be done in the next day or two, a source said. Other than that, "there was nothing" in the high-grade market for the day.

Secondary trading was quieter on Wednesday, though overall investment-grade Trace volume remained strong, up 3% at more than $13 billion, a source said.

"It's been pretty quiet in the afternoon," a trader said. "Through the holidays, everyone's in risk collapse mode right now."

The Markit CDX Series 14 North American investment-grade index spread was unchanged on Tuesday at 86 basis points, according to Markit Group Ltd.

The financial sector was seen trading 2 bps to 5 bps better, while telecommunications and technology bonds firmed about 2 bps, a trader said.

The drop in Treasuries affected rate-sensitive high-grade bonds such as those from Overland Park, Kan.-based Sprint Nextel Corp., a trader said.

"Sprint bonds that are very rate sensitive wound up closing the day down about a point," the trader said. "That was just on the back of the interest rate movement."

Treasuries plummeted on Tuesday, sending yields soaring, after the Federal Reserve's statement indicated no plans to ease up on the $600 billion debt buyback program despite rising interest rates and stronger economic data.

"It seems to be just in a straight downward movement," said Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co. "The 10-year note is up more than 75 basis points since the last Fed meeting, and the Fed made no comment on the rising interest rates."

The 10-year benchmark note yield has risen nearly 90 bps since the Federal Reserve met on Nov. 3, when it closed at 2.57%.

The yield on the 10-year benchmark note ended the day at 3.46%, up from 3.27% on Monday. The 30-year bond yield jumped to 4.52% from 4.41%.

Fed meeting takes toll

Any new trades expected for the day failed to materialize.

That was likely due to the one-day Federal Reserve Federal Open Market Committee meeting. There was no rate change announced.

"I think people weren't sure if they were going to raise rates or not, so nobody wanted to do anything," a source said at the end of the day.

It could be only a one-day break.

"I've heard there are some deals for tomorrow, so it shouldn't be this quiet," a market source said.

Deals from First Horizon National Corp. and Huntington Bancshares Inc. are both on tap. They plan to repay Troubled Asset Relief Program funds. There is no word on when they will price.

Cogdell plans preferred sale

Cogdell Spencer is planning a sale of series A cumulative redeemable perpetual preferred stock at $25 per share, according to a 424B5 filing with the Securities and Exchange Commission.

Citigroup Global Markets Inc., Jefferies & Co., Inc. and KeyBanc Capital Markets Inc. will be the bookrunners.

Proceeds will be contributed to the company's operating partnership, Cogdell Spencer LP, in exchange for operating partnership units. The proceeds will then be contributed to Erdman Co. to repay a senior secured term loan and to be used for working capital.

The real estate investment trust for medical offices is based in Charlotte, N.C.

Dell flat

Dell Inc.'s bonds were flat in trading Tuesday on Monday's news of its $960 million bid to acquire Compellent Technologies, Inc.

"Dell paper was unchanged yesterday," a trader said. "It was a relatively small acquisition."

The technology and IT company is based in Round Rock, Texas.

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