Financials dominate yet again as BofA, KfW price; spreads tighten; Time Warner Cable unchanged

By Cristal Cody and Aleesia Forni

Virginia Beach, Jan. 15 - Bank of America Corp.'s new $6.15 billion deal was the focus of another session dominated by financials in the high-grade primary market.

The four-part sale included a $1.25 billion add-on to BofA's 2.6% notes due 2019. The tap priced at Treasuries plus 87 basis points.

A $400 million issue of five-year floating-rate notes priced to yield Libor plus 78 bps, and a $2.5 billion issue of 10-year notes priced with a spread of Treasuries plus 125 bps.

There was also $2 billion of 30-year notes, which sold at 120 bps over Treasuries.

In other primary action, KfW sold $4 billion of 1.875% global notes at mid-swaps plus 9 bps on Wednesday, according to an informed source.

The notes priced on top of talk, which tightened from earlier guidance of mid-swaps plus 10 bps area.

International Bank of Reconstruction and Development (World Bank) priced $550 million of floating-rate green bonds due 2015 at par to yield Libor minus 6 bps, according to a company release.

Credit Agricole SA was also in the market on Wednesday pricing an issue of perpetual tier 1 notes, though full details were unavailable at press time.

This rush of supply to begin the new year in the high-grade primary space is beginning to take its toll on the market, one source noted.

"We're starting to see some signs of fatigue at this point," the source said early during the session.

Despite this, Bank of America's offering saw significant tightening from initial price guidance levels.

The bank priced the issue following its announcement on Wednesday that earnings during its fourth quarter were up more than four times at $3.44 billion.

Investment-grade bond spreads tightened for a second consecutive session, according to market sources.

The Markit CDX North American Investment Grade series 21 index firmed 1 bps to 2 bps over the day, a source said.

Time Warner Cable Inc.'s notes stayed mostly unchanged in secondary trading, according to market sources.

Time Warner Cable rejected Charter Communications Inc.'s offer on Monday to acquire the company for about $132.50 a share. Time Warner Cable's bonds widened initially on Tuesday but recovered, according to a trader.

BofA four-parter

Bank of America sold $6.15 billion of senior notes in four tranches on Wednesday, according to a market source.

The sale included a $1.25 billion tap of the company's existing 2.6% notes due 2019 with a spread of Treasuries plus 87 bps.

There was also a $400 million five-year floater priced at par to yield Libor plus 78 bps.

$2.5 billion of 10-year notes were sold with a spread of Treasuries plus 125 bps.

Finally, $2 billion of 30-year notes priced at 120 bps over Treasuries.

Bank of America is a financial services company based in Charlotte, N.C.

KfW sells floaters

KfW sold $4 billion of 1.875% global notes (Aaa/AAA/AAA) to yield mid-swaps plus 9 bps on Wednesday, according to an informed source and an FWP filed with the Securities and Exchange Commission.

The notes priced on top of talk, which was tightened from guidance of mid-swaps plus 10 bps area.

Pricing was at 99.667.

Barclays, Goldman Sachs & Co. and Morgan Stanley & Co. LLC are the joint bookrunners.

The German government-owned development bank is based in Frankfurt.

World Bank floaters

World Bank priced a $550 million floating-rate green bond (Aaa/AAA/) due 2015 at par to yield Libor minus 6 bps, according to a company release.

BofA Merrill Lynch, Goldman Sachs and SEB were the joint bookrunners.

The issuer is based in Washington, D.C.

Time Warner Cable unchanged

Time Warner Cable's 4% notes due 2021 (Baa2/BBB/BBB) traded mostly unchanged in the 92 area after climbing to as high as 97.5 at the end of December, according to market sources.

The notes traded flat earlier on Wednesday at a spread of 235 bps bid, 225 bps offered, a trader said.

The company sold $1 billion of the notes at 99.109 to yield 4.11%, or a spread of 210 bps over Treasuries on Sept. 7, 2011.

The broadband communications company is based in New York City.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined, according to a market source.

Bank of America Corp.'s CDS costs firmed 3 bps to 75 bps bid, 77 bps offered. Citigroup Inc.'s CDS costs firmed 2 bps to 69 bps bid, 71 bps offered. JPMorgan Chase & Co.'s CDS costs tightened 1 bp to 65 bps bid, 67 bps offered. Wells Fargo & Co.'s CDS costs ended flat at 39 bps bid, 41 bps offered.

Merrill Lynch's CDS costs firmed 3 bps to 77 bps bid, 82 bps offered. Morgan Stanley's CDS costs declined 2 bps to 86 bps bid, 88 bps offered. Goldman Sachs Group, Inc.'s CDS costs tightened 2 bps to 91 bps bid, 93 bps offered.

Paul Deckelman contributed to this review.

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