Dell, International Game, American Financial price; new bonds trade higher; banks popular

By Andrea Heisinger

New York, June 10 - There was no shortage of deals in the high-grade primary Wednesday with Dell Inc. doing a sale with a quick turnaround, along with those from International Game Technology, American Financial Group, Inc, Suncorp-Metway, European Investment Bank, Dominion Resources Inc. and Korea Hydro & Nuclear Power Co. Ltd.

The market held onto the good tone and momentum of the previous day, but issuance is set to die down for the remainder of the week, sources said.

The secondary market was busy processing all of the new deals from the past couple of days, a trader said. An eye was also on the large banking names, a few of which are being allowed to pay back funds to the government and as a result, are popular with investors.

Dell's two new tranches tightened nicely in trading, as did the International Game 10-year issue.

Two recent sales from Anadarko Petroleum Corp. and Fortune Brands Inc. were mixed in trading, with Fortune losing gains while Anadarko strengthened futher.

Spreads remained tighter in general by late Wednesday as Treasury yields widened. The 10-year note was out 9 basis points, a source said, to 3.94%. The five-year note fared slightly better and widened 5 bps to a 2.91% yield.

International Game draws huge interest

The note offering from International Game Technology - a "very infrequent issuer," as a source close to the deal said - was more than eight times oversubscribed, he said.

Books for the $500 million offering of 7.5% 10-year senior notes totaled about $4.6 billion, he said. They priced at 362.5 bps over Treasuries.

"It was kind of a blowout," he said. "We did a roadshow this morning, and it kind of went from there."

On top of the high demand, the notes came in at the tightest end of guidance, he said. They were talked at the 375 bps area, with a margin of plus or minus 12.5 bps.

The electronic gaming equipment and network systems company is based in Reno, Nev., and plans to use proceeds to fund the repurchase or redemption of a portion of its 2.6% senior convertible notes due 2036.

Banc of America Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., Mitsubishi UFJ Securities, Mizuho Securities USA Inc., Morgan Stanley & Co. Inc., RBS Securities Inc. and Wachovia Capital Markets LLC ran the books.

Dell sells $1 billion

Dell sold a benchmark $1 billion of notes Wednesday after announcing its intention earlier in the day with an 8-K filing with the Securities and Exchange Commission.

The deal went fairly swiftly, with pricing completed by mid-afternoon.

The $400 million of 3.375% three-year notes priced to yield Treasuries plus 150 bps. They were talked at 150 bps over Treasuries.

The $600 million of 5.875% 10-year notes priced at 195 bps over Treasuries. Guidance was 195 bps.

Bookrunners tapped by the Round Rock, Texas, company were Banc of America Securities, Deutsche Bank Securities and HSBC Securities.

The computer and technology giant plans to use proceeds for general corporate purposes, including repurchase of Dell's common stock, acquisitions, investments, additions to working capital, capital expenditures and advancements to or investments in subsidiaries.

The sale had books of about $7 billion Wednesday morning, a source away from the deal said.

"It's not surprising," he said. "They're not going anywhere."

Dominion Resources sells notes

Energy producer and transporter Dominion Resources sold $625 million enhanced junior subordinated notes early in the day. The offering was increased from an initial $150 million, a source close to the deal said.

The 8.375% notes have an initial maturity of 2064, with a final date of 2079. They also have an over-allotment option of $62.5 million, to be exercised within three days of settlement.

Bookrunners were Banc of America Securities, Citigroup Global Markets Inc., Morgan Stanley, UBS Investment Bank and Wachovia Capital Markets.

Proceeds will be used for general corporate purposes by the Richmond, Va., company.

The sale was already going well late Tuesday after the deal was announced but before it had officially launched. The source said there was a lot of demand for utility deals in the retail note market.

American Financial taps market

American Financial Group, the holding company for property and casualty insurance subsidiaries, sold an upsized $350 million of 9.875% 10-year notes at par. The notes were priced at a yield, an informed source said.

Talk was in the area of 9.875% to 10%, he said, and it came in at the tight end of that range.

The size was increased from $300 million. Demand left the books about two times oversubscribed, with "north of $700 million" on the books, he said.

Banc of America Securities, JPMorgan and Wachovia were bookrunners for the Cincinnati-based issuer.

Although a secondary level wasn't available, the source said he was "surprised it was freed for trading." The sale priced reasonably late in the afternoon.

Issuance mostly done for week

Syndicate desks reported little left on their calendars for the remainder of the week.

"We don't really have anything," one source said. "That's not to say others don't, but it's probably going to get pretty quiet."

It was expected the bulk of sales would come in the top part of the week, which has held true.

"We had good tone, which kind of helped," a source said. "A lot of people got in in the last couple days."

A source from a second syndicate desk concurred, saying they also had "nothing, really" left to price this week. "We're kind of tapped," he said.

Suncorp sells guaranteed notes

Australian bank and insurance company Suncorp-Metway sold $2.5 billion of floating-rate notes due 2010 that are backed by that country's government, a source close to the deal said. It was done via Rule 144A.

The floaters priced at par to yield three-month Libor plus 37.5 bps.

Citigroup and Nomura Securities ran the books.

EIB prices $1 billion

Frequent issuer European Investment Bank priced $1 billion 3.125% five-year notes to yield 73 bps over Treasuries, according to an FWP filing with the SEC.

The financer for the European Union, based in Kirchberg, Luxembourg, tapped Credit Suisse Securities for the sale.

Korea Hydro prices bonds

Korea Hydro & Nuclear Power sold $1 billion 6.25% five-year notes at Treasuries plus 362.5 bps.

Bookrunners were Barclays Capital, Citigroup, Deutsche Bank Securities and Goldman Sachs.

The notes priced tight to the original guidance that was in the 400 bps area, a market source said.

Dell bonds tighten

The two tranches of the new Dell issue tightened once they were freed for trading, a trader said. The 3.375% due 2012 came in 25 bps to 125 bps bid from its 150 bps over Treasuries price.

The second tranche of 5.875% 2019 bonds performed similarly. They priced at Treasuries plus 195 bps and were quoted at 181 bps bid, 177 bps offered.

International Game note comes in slightly

The 7.5% bond due 2019 from International Game Technology tightened about 10 to 15 bps, a trader said. It was sold at Treasuries plus 362.5 bps, with trading level at 352 bps bid, 347 bps offered.

Anadarko tranches gain

The three tranches of the notes from Anadarko Petroleum priced Tuesday were about 35 bps tighter uniformly late Wednesday, a secondary source said. They had continued to gain from Tuesday's levels.

The 5.75% due 2014 sold at Treasuries plus 295 bps and was quoted at 270 bps bid, 260 bps offered, while the 6.95% due 2019 sold at 325 bps over Treasuries and was at 290 bps bid, 283 bps offered in the secondary. Both of these levels were about 5 bps better than the previous day.

The third tranche of 7.95% bonds due 2039 was quoted at 300 bps bid, 296 bps offered after selling at 335 bps over Treasuries. These bonds made a swift improvement from Tuesday when they were quoted at 320 bps bid, 300 bps offered.

Fortune Brands loses ground

The 6.375% due 2014 from Fortune Brands lost steam from the previous day, a trader said.

The bond priced at 350 bps over Treasuries and was in the secondary at 339 bps bid, 334 bps offered. This is a step back from Tuesday when they were at 337 bps bid, 325 bps offered.

Financials lead trading, top movers

Financial bonds led trading as of early Wednesday afternoon after 10 banks were allowed to pay back Temporary Asset Relief Program funds to the government. These popular bonds were a mix of those backed by the Federal Deposit Insurance Corp. those that are not, but were heavy on the latter.

Bank of America Corp.'s 7.375% bond due 2014 led the pack, while Morgan Stanley's 7.3% bond due 2019 was also near the top.

An FDIC-backed bond from JPMorgan Chase & Co. and a non-FDIC note from Goldman Sachs Group were also popular with investors.

JPMorgan, Goldman Sachs and Morgan Stanley were among the 10 firms that are allowed to repay the TARP funds. Bank of America, along with Citigroup, have not been given the go ahead.

Two financial names also topped the list of bonds with the biggest moves of the day, a source said.

Bank of America's 5.42% bond due 2017 was more than 50 bps tighter than a week ago, despite not being able to pay back its TARP money.

A bond from Anadarko Petroleum also tightened from a week ago, a day after it successfully priced a $900 million deal. The company's 5.95% due 2016 was more than 40 bps better than a week ago.

Barclays Bank could not ride the positive wave that many American financial names did, and the issuer saw its 5.45% bond due 2012 widen about 20 bps from a week ago.

Bank, broker CDS tighten

Credit-default swaps for bank and brokerage names were generally tighter to unchanged by late afternoon, a trader said.

Banks were unchanged to 8 bps tighter, he said, with brokerage names similar at unchanged to 6 bps tighter.

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