GE Capital brings two tranches; KBN prices; Zions plans auction; Nokia drops; Zions rises

By Andrea Heisinger and Cristal Cody

New York, April 24 - Deals tentatively flowed into the high-grade bond market on Tuesday with General Electric Capital Corp. and Kommunalbanken Norway selling bonds.

GE Capital priced $3.1 billion of notes in two parts after parent company General Electric Co. announced first-quarter earnings on April 20. The Q1 earnings beat analyst expectations despite a drop in revenue from the same period the previous year.

Kommunalbanken reopened an issue of five-year floating-rate notes to add $200 million. The deal brought the amount outstanding to $500 million.

There was also a reopening of five-year notes by Zions Bancorporation to add $100 million via an online auction. The sale brings the total issuance to $400 million.

Zions is also preparing an auction of up to $150 million of new perpetual preferred stock shares.

Issuers have limited opportunities to price bonds this week as they have to work around the conclusion and any announcements out of a two-day Federal Reserve Federal Open Market Committee meeting on Wednesday and economic data coming out on Friday.

Following a weak start on Monday, the primary is only expected to see single-digit issuance for the week, a syndicate source said.

"It felt a lot better today, actually," another source said on Tuesday of the rebound in market tone.

There could be some activity in the primary on Wednesday with deals announced and launched prior to any announcement from the Fed, the source said.

"I think we'll have one or two that will look."

The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 100 bps.

Zions Bank's 4.5% senior notes due 2017 that it plans to reopen are trading higher since the financial services company sold the notes in March.

GE Capital's new notes due 2017 traded 4 bps tighter in the secondary market on Tuesday.

Nokia Corp.'s bonds dropped in trading after Fitch Ratings downgraded the company on weak first quarter performance.

Investment-grade bank and brokerage credit default swaps costs were mixed.

Citi's CDS costs firmed 3 bps to 241 bps bid, 246 bps offered. J.P. Morgan's CDS costs eased 1 bp to 106 bps bid, 111 bps offered. Wells Fargo's CDS costs traded 2 bps tighter at 88 bps bid, 93 bps offered.

Brokers were mixed. Merrill Lynch's CDS costs rose 3 bps to 285 bps bid, 295 bps offered. Morgan Stanley's CDS costs firmed 2 bps to 375 bps bid, 380 bps offered. Goldman Sachs' CDS costs traded unchanged at 279 bps bid, 284 bps offered.

Treasuries ended lower on the day. The yield on the benchmark 10-year note rose to 1.97% from 1.93%. The 30-year bond yield rose 4 bps to 3.13%.

GE brings $3 billion deal

General Electric Capital sold $3.1 billion of bonds (A1/AA+/) in two parts, a source close to the trade said.

There was a $1.1 billion tranche of two-year floating-rate notes priced at par to yield Libor plus 70 bps. The floaters sold in line with talk in the 70 bps to 75 bps area, the source said.

A second part was $2 billion of 2.3% five-year notes priced at a spread of Treasuries plus 150 bps. The notes sold at the tight end of guidance in the low 150 bps area.

There was roughly $1.2 billion in demand for the floating-rate notes and $4.1 billion for the five-year notes, the source said.

"The floating-rate [tranche] was sized to demand," they said.

Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC were bookrunners.

In the secondary market, GE Capital's 2.3% notes due 2017 traded tighter at 146 bps bid, 145 bps offered, a trader said late afternoon.

The financial products and services provider is based in Norwalk, Conn.

KBN's reopening

Kommunalbanken Norway reopened its issue of floating-rate notes due in March of 2017 to add $200 million, a market source said.

The notes (Aaa/AAA/) were priced at 100.022.

Total issuance is $500 million including $300 million previously sold, the source said.

The deal was done under Rule 144A and Regulation S.

Deutsche Bank Securities Inc., Goldman Sachs & Co. and HSBC Securities (USA) Inc. were bookrunners.

The government-funded lender to municipalities is based in Oslo.

Zions reopening five-years

Zions Bancorp is preparing to reopen its issue of 4.5% senior notes due in March of 2017 via an online auction to add $100 million, according to a 424B3 filing with the Securities and Exchange Commission and a press release.

The auction will open on Wednesday at 4:30 p.m. ET and close at 3 p.m. ET on Thursday, according to the release.

Total issuance will be $400 million including $300 million previously sold.

Deutsche Bank Securities Inc. is running the books. Zions Direct, Inc. is auction agent.

Proceeds are being used for general corporate purposes, possibly including the partial redemption of remaining Series D preferred stock held by the U.S. Treasury or to redeem senior floating-rate notes due on June 21.

In the secondary market on Tuesday, the 4.5% notes due 2017 traded better at par bid, 100.75 offered, a trader said. The company sold $300 million of the notes (/BBB-/BBB-) on March 22 at 94.25.

The financial services holding company is based in Salt Lake City.

Zions to auction preferreds

Zions Bank's board of directors has given the go-ahead on an auction of up to $150 million new tier I capital qualifying perpetual preferreds, according to a press release.

Proceeds from the sale will be used to redeem all $142.5 million outstanding shares of the 11% series E fixed-rate resettable noncumulative perpetual preferred stock (NYSE: ZBPE).

Timing of the issuance is subject to market conditions.

Zions Direct Inc. will be the auction agent. Deutsche Bank Securities Inc. is the underwriter and bookrunner.

Zions is a Salt Lake City-based bank holding company.

Nokia drops

Fitch dropped Nokia's long-term issuer default and senior unsecured ratings to BB+ from BBB- on Tuesday.

After the downgrade, Nokia's 5.375% notes due 2019 fell in trading to 84.00 offered on Tuesday, a trader said late in the afternoon.

The notes (A1/A/) traded flat on Monday at 88.50 bid, 89.50 offered. Nokia sold $1 billion of the notes on April 30, 2009 at 99.075.

Nokia's 6.625% bonds due 2039 also traded lower at 84.25 bid, 84.75 offered in the secondary market, the trader said.

Nokia sold $500 million of the long bonds in the April 2009 deal at 99.494.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

Stephanie N. Rotondo contributed to this review

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