HSBC floater caps week of more than $10 billion in deals; coming week to see more volume; secondary quiets

By Andrea Heisinger

New York, Aug. 8 - HSBC USA Inc. priced a mid-sized issue quietly Friday as the week ended with more than $10 billion in new deals.

The day ended on a strong note, leading to optimism about the coming week.

The secondary market was quiet Friday after somewhat brisk trading for a couple of days. One trader called it a "typical summer Friday."

HSBC issue seen at good level

The London-based financial institution priced $700 million in one-year senior unsecured floating-rate notes Friday at par to yield three-month Libor plus 40 basis points.

This was a good level for the issuer, a source said.

HSBC Securities ran the books.

That deal constituted Friday's issuance, ending a week of about $10.3 billion in new issues. This was up from last week's issuance of more than $8 billion.

Among the larger issuers were XTO Energy, TransCanada Pipelines Ltd., CME Group Inc. and Societe Generale.

Smaller issuers included Public Service Co. of Colorado, Northern Trust Corp. and Caterpillar Financial Services Corp.

Coming week's issuance seen better

The relatively strong close to Friday's market may lead to companies issuing right off the bat Monday, sources said Friday.

This is a change from recent weeks when issuance wasn't expected until Tuesday after a day of feeling out market conditions.

"I think it should be fairly active," a source said of the coming week. "There was a good close today and things are more optimistic than typical for a Friday."

Higher rated issuers have been able to get issues done in the present market, but those not rated in the A category have held off after market setbacks like the large loss reported by American International Group late Wednesday.

"I think we're going to see a few on Monday," a source said.

This week had a lull in issuance Tuesday - normally a prime day for new deals - due to the Federal Reserve meeting.

That meant some issuers weren't able to get into the market this week as planned.

"I think a lot of people held off, and held off and then it was the end of the week," a source said.

Another source also reported a healthy calendar for the coming week, although how many of the handful of issuers would actually price would depend on day-to-day market conditions.

"There are two to three deals, all non-financials, that could price as early as Tuesday, or we may not see any of them," he said.

This upswing in potential issuers was partly due to Friday's strong market close.

"Things felt good, and equity was strong," a source said, adding that the latter had mostly to do with lower oil prices.

Many issuers seem to be looking past August.

During conversations with potential issuers, many are looking at September for various reasons, a source said.

"They are looking at later when desks are more staffed and things pick up again," he said.

Caterpillar, CME tighten in secondary

The fixed-rate portions of Thursday's issues from Caterpillar Financial Services Corp. and CME Group Inc. were seen tightening in secondary trading Friday.

The Caterpillar Financial 4.9% five-year notes were "5, 6, 7 basis points tighter," a trader said. They priced at 175 bps over Treasuries and were seen at 170 bps bid, 167 bps offered.

Both issues also had floating-rate tranches, but a source said they hadn't seen any levels on them.

MBIA, Berkshire report earnings, bonds mixed

Insurance company MBIA Inc. announced its net income was up to $1.7 billion in the second quarter.

Its bonds weren't seen moving a great deal, a source said, although some were up 5 to 6 bps on the news.

Alongside the company's reported earnings boost was a wary look at the future. The company said it fears it may lose some clients due to credit rating downgrades.

Also reporting earnings Friday was financial holding company Berkshire Hathaway Inc.

The company did not report its earnings until after the market close, so sources said they didn't see much movement one or the other with the company's outstanding bonds.

Secondary quiet as primary stalls

Traders reported things were quiet Friday, with one emphasizing it was "very quiet." There weren't any big movers to speak of, one said, other than two of the issues from Thursday trading tighter.

One said he wasn't monitoring anything in particular and that trading volume was "extremely light."

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