Deutsche Bank, ING, NY Life, KfW, OeKB contribute to solid day; Sprint wider, YUM! tighter

By Andrea Heisinger and Paul Deckelman

Omaha, Oct. 9 - A few issuers provided more than $7.25 billion in new issues Tuesday, including those from OeKB, New York Life Global Funding, ING USA Global Funding, Deutsche Bank AG London and KfW.

Deutsche Bank had the largest issue of the day with $3 billion in 5.375% five year notes priced at 99.944 with a spread of Treasuries plus 105 basis points.

In the secondary market on Tuesday, a somewhat easier tone was seen, with declining issues outnumbering advancers by about a four-to-three ratio.

But Deutsche Bank's big new issue of five-year notes was seen having tightened by several basis points after it moved into the aftermarket. However, there was no immediate trading seen in New York Life Global Funding's new 5-year issue.

Sprint Nextel Corp.'s bonds were seen wider after the Number-Three U.S. wireless carrier warned that it will show a sizable subscriber loss and will miss its previously announced revenue and profit-target - and followed that bearish news up by making chairman and chief executive officer Gary Forsee walk the plank.

On the other hand, YUM! Brands Inc.'s bonds were seen having tightened after the restaurant operator posted strong numbers - even though it said that it would spend up to $4 billion to buy back shares over the next two years.

ING brings $1.5 billion

Back in primary news, the ING issue was $1.5 billion in two tranches of $750 million in two-year floating-rate notes.

The first tranche had a coupon of one-month Libor plus 36 bps and the second tranche three-month Libor plus 30 bps.

New York Life priced $750 million in 5.25% five-year notes at 99.957 to yield 5.26%, at a spread of Treasuries plus 92 bps.

Austria's OeKB priced $1.75 billion in 4.75% five-year global notes at par to yield 4.795%, at a spread of Treasuries plus 45.5 bps.

The German bank KfW priced $250 million in 5% two-year notes at par.

Despite the sale of several substantial deals, sources were ambivalent about the activity level, saying it was both strong but not exceptional - a pattern that is expected to continue.

"The volume's pretty big today," a market source said. "Today might not be the day for a lot of issuers to come into the market, and we're going to see more days like it."

The rest of the week will see similar volume, sources said.

"It may not look like the sexiest day but if you add all the numbers up it's solid," a source said.

Kexim plans benchmark

A new issue from Export-Import Bank of Korea is expected to price Wednesday. It is expected to be a benchmark size issue, up to $1 billion, a source said. Price talk is in the Treasuries plus 120 bps area, with BNP Paribas, Merrill Lynch, Morgan Stanley and ABN Amro acting as bookrunners.

One market source commented Tuesday seemed "pretty slow, and not too many really stepped in."

"This is probably what it's going to be like for the rest of the week."

Limiting volume is the increasing distance of the summer's credit market problems.

Once the market started improving, some of the backlog from issuers was brought to the market, the source said.

"At least part of that [backlog] has been taken care of," he said.

The rest of this week should stay steady, although likely will not get any busier.

"I think tomorrow and Thursday will be fairly busy," a source said. "It will get busier toward the end of the month after the banks add up all their earnings."

It's a blackout period now for a lot of financials who would otherwise be issuing, a source said, which is also contributing to the somewhat slow time.

"It's kind of a rebuilding period right now," he said.

New Deutsche bonds move up

A trader said that the new Deutsche Bank 5 3/8% notes due 2012 tightened to a bid level around 101 basis points off comparable Treasuries, versus their 105 bps spread when they priced.

However, he said that he had not seen any trades taking place in the new 5¼% bonds due 2012 from New York Life Global Funding, which priced at 92 bps off Treasuries.

Among other financial names, a source indicated that Merrill Lynch & Co.'s bonds were better on the session, particularly the actively traded 6.05% bonds due 2012, among other issues, as investors apparently looked beyond the company's announcement during Friday's abbreviated pre-holiday session that it will likely show a 50 cents per share loss when it reports earnings next month, due to the recent credit crunch.

But while Merrill showed some strength, General Electric Capital and, to a lesser extent, Lehman Brothers were seen on the downside.

Broker CDS spreads mostly tighter

Apart from the cash bonds, a trader said that credit-protection costs for the major brokerage names were mostly lower - a sign of continued investor confidence in the sector. While he saw the cost of a five-year credit default swaps contract to hedge against a possible event of default in Bear Stearns' paper having widened a little bit to 70/75 bps, from 69/74 bps late Friday, the other names in the sector were tighter, with Lehman CDS spreads in 1 bp to 58/63 bps, Merrill Lynch's 3 bps tighter at 41/46 bps, and Morgan Stanley's a full 4 bps tighter at 38/43 bps

Sprint wider on lower forecast, shakeup

Away from the financial names, a major mover was Sprint, which announced on Monday - when there was virtually no debt being traded on U.S. markets - that it expects a net third-quarter loss of about 337,000 monthly subscribers and also warned that it will miss previously announced targets for annual operating profits and revenues.

The company also said that chairman and CEO Forsee would leave the company immediately after four years at the helm; news reports indicated that Forsee was forced out by board members unhappy with the level of customer defections to larger rivals Verizon Wireless and AT&T.

A market source saw Sprint's 6.9% notes due 2019 having widened by 10 bps to 220 bps over Treasuries.

Meanwhile, a source at Advantage Data Inc. said that there was "a lot of volume" in Sprint's 6% notes due 2016, with at least $65 million face value of the bonds having changed hands by around midday, making it the Number-Two mover up to that point; it finished as third-most widely traded bond on the session.

The 6s had been trading at a spread of 185 bps on Thursday; the Advantage Data source, quoting the Trace bond-tracking system, said that those bonds had widened out by about 5 bps to 7 bps on the day, with trades of several millions of dollars in the bonds having been seen at spreads of 190 bps over and even 192 bps over, and other trades at levels as wide as 193 bps.

YUM! tighter!

Advantage Data also said that spreads on YUM! Brands bonds have recently come in sharply, with its 7.7% notes due 2012 having narrowed to 145 bps from levels last week about 10 bps wider, according to Trace. The source at Advantage Data said that the company's 6¼% notes due 2016 had come in to 157 bps as of late Monday, from prior levels at 172 bps, according to Trace, and he saw the bonds quoted Tuesday in non-Trace trading as tight as 142 bps, following the release of the strong quarterly numbers.

Louisville, Ky.-based YUM!, which operates the KFC, Taco Bell and Pizza Hut national fast-food chains, reported Monday that overall net income rose to $270 million, or 50 cents per share, from $230 million, or 42 cents per share, in the same quarter a year ago. Revenues rose 13% to $2.56 billion, from $2.28 billion a year ago. Wall Street had been expecting earnings around 45 cents per share and $2.44 billion of revenues.

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