Air Products, Kommunalbanken price amid Fed meeting, GDP data; Berkshire firms slightly in trading

By Aleesia Forni and Andrea Heisinger

New York, Jan. 30 - High-grade issuance was light on Wednesday with Air Products and Chemicals Inc. selling bonds, as others sat on the sidelines.

Air Products sold $400 million of 10-year senior notes for general corporate purposes, including note repayments.

There was also a reopening of floating-rate notes due 2016 by Norway's Kommunalbanken AS to add $200 million. The total outstanding will be $500 million.

Other issuers awaited an announcement from the two-day Federal Reserve meeting of the Federal Open Market Committee or were in earnings blackout.

The Fed made no major changes to policy or key interest rates, which was the expected outcome of the meeting.

There were also headlines that the gross domestic product of the United States contracted in the fourth quarter of 2012, which "didn't help much" as issuers decided whether or not to sell high-grade bonds.

"I think people are leaning toward the junk stuff," a market source said, adding that yields have shrunk on high-grade bonds, and new supply has been low the past couple of weeks.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 95 bps on Tuesday.

In the secondary market, Tuesday's $2.6 billion of senior notes from Berkshire Hathaway Inc. traded unchanged to better in the secondary market on Wednesday, according to a market source.

Meanwhile, Goldman Sachs' 6.75% notes due 2037 were 1 bp weaker on the day, while Morgan Stanley's 5.625% notes due 2019 traded 19 bps tighter.

Air Products' 10-years

Air Products and Chemicals was in the market with a $400 million offering of 2.75% 10-year senior notes (A2/A/) priced to yield Treasuries plus 78 bps, an informed source said.

The sale was done at the low end of guidance in the low 80 bps area, a source said.

Bookrunners were HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes, including repayment of commercial paper. A portion may be used to repay a $300 million 4.15% senior note that matures on Feb. 1, 2013. The general corporate purposes may also include repayment and refinancing of debt, acquisitions, working capital, capital expenditures and repurchases and redemptions of securities.

Air Products, an industrial gas and chemical maker based in Allentown, Pa., was last in the market with a $400 million offering of five-year notes on Sept. 6, 2012.

KBN's add-on

Kommunalbanken reopened its floating-rate notes due Oct. 31, 2016 to add $200 million, a market source said.

The notes (Aaa/AAA/) were sold at 100.003 with a coupon of Libor plus 13 bps.

Total issuance is $500 million including $300 million sold on Oct. 23, 2012 at par to yield Libor plus 13 bps.

Bookrunners were Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Nomura Securities International Inc.

The bank provides low-cost funding to municipalities and is based in Oslo.

Berkshire mostly flat

Berkshire Hathaway's $300 million of 0.8% three-year notes was quoted at 37 basis points bid, 35 bps offered following Tuesday's pricing with a spread of Treasuries plus 37.5 bps, a trader said.

The source quoted the $800 million tranche of 1.55% five-year notes flat at 70 bps bid, 65 bps offered.

The notes were sold at 70 bps over Treasuries.

Meanwhile, the $500 million of 3% 10-year bonds traded 1 bp better at 109 bps bid, 106 bps offered.

Berkshire Hathaway priced the tranche with a spread of Treasuries plus 110 bps.

The $1 billion tranche of 4.5% 30-year bonds was also quoted 1 bp tighter at 139 bps bid, 136 bps offered.

The bonds priced in Tuesday's market at 140 bps over Treasuries.

The holding company for various subsidiaries is based in Omaha.

Morgan Stanley

In other trading, the 5.625% notes from Morgan Stanley due 2019 closed the session 19 bps better at 246 bps bid.

The bank sold $3 billion of the notes at 225 bps over Treasuries on Sept. 16, 2009.

Goldman Sachs firms

Goldman Sachs' 6.75% bond due 2037 widened 1 bps on the day 267 bps bid.

Goldman priced the $2.5 billion bond at 190 bps over Treasuries in September 2007.

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