Lone new corporate from Anheuser-Busch InBev; Georgia-Pacific notes trade 65 bps tighter

By Andrea Heisinger and Cristal Cody

New York, Jan. 24 - Anheuser-Busch InBev Worldwide Inc. and National Bank of Canada priced new paper on Monday as earnings reports continued to slow issuance.

Belgium-based Anheuser-Busch InBev sold an upsized $1.65 billion of bonds in three tranches. A tranche of three-year floating-rate notes was added, boosting the size from $1 billion.

The National Bank of Canada sold $1 billion of three-year covered bonds, following the lead of several other financial names that have priced that variety of paper. The bonds were priced under Rule 144A.

There is about $15 billion to $20 billion in supply expected for the week, and sources said late in the day that Tuesday could be busier following the success of the Anheuser-Busch deal. There was "considerable interest" in that deal, a source close to it said, declining to give a dollar amount.

The tone in the primary market was okay to start the week, a syndicate source said, adding that "earnings aren't over yet."

It's possible more deals could come from the big banks that haven't already priced debt after announcing earnings, but "nothing solid yet," he said.

Morgan Stanley tapped the market with a $5.25 billion deal in three tranches, and Goldman Sachs Group Inc. sold $2.5 billion of 30-year bonds the previous week after reporting quarterly and 2010 earnings.

In the secondary market on Monday, bonds from Georgia-Pacific LLC and others in the paper and packaging sector were active on Rock-Tenn Co.'s plan to buy Smurfit-Stone Container Corp., sources said.

Georgia-Pacific's notes have firmed 65 basis points in secondary trading since they priced on Oct. 27, a trader said.

Elsewhere, the new debt sold earlier in the day from Anheuser-Busch InBev and the National Bank of Canada firmed in the secondary market, sources said.

The Markit CDX Series 14 North American investment-grade index ended the day 1 basis point tighter at an 82-bps spread, a source said.

"It was a quiet day," a trader said, reflecting on Sunday's New York Jets-Pittsburgh Steelers football game. "It wasn't the Super Bowl, but for New York, all intents and purposes, it was the Super Bowl yesterday and Trace volume shows that today."

Overall investment-grade Trace volume was flat on Monday at about $13.5 billion, according to a market source.

Treasuries started the week mostly flat on no economic data and ahead of the week's debt auctions and president Barack Obama's State of the Union Address.

The 10-year note yield fell 1 bps to 3.4% on Monday. The 30-year bond yield was unchanged at 4.56%.

Anheuser-Busch upsizes sale

Anheuser-Busch InBev Worldwide sold an upsized $1.65 billion of senior notes (Baa2/BBB+/BBB) in three parts by late afternoon, a market source said.

The size was increased from an initial $1 billion when a tranche of three-year floating-rate notes was added.

That $650 million of three-year floaters priced at par to yield Libor plus 55 basis points. The notes were talked in the range of Libor plus 55 bps to 60 bps and priced at the tight end of that.

The $500 million of 2.875% five-year notes sold at 99.817 to yield 2.914% with a spread of Treasuries plus 90 bps. Price talk was in the 95 bps over Treasuries area.

A second part was made up of $500 million of 4.375% 10-year notes priced at 99.283 to yield 4.464% with a 105 bps over Treasuries spread. The tranche sold at the tight end of guidance in the area of 110 bps over Treasuries.

Barclays Capital Inc., Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and Mitsubishi UFJ Securities International plc were bookrunners.

Proceeds are going toward general corporate purposes.

The notes are guaranteed by Anheuser-Busch InBev SA/NV, Brandbrew SA, Cobrew NV/SA and Anheuser-Busch Cos., Inc.

In the secondary market, Anheuser-Busch InBev's tranche of five-year notes was quoted at a bid of 88 bps, a trader said. The 10-year notes were seen trading tighter at 100 bps bid, 97 bps offered.

The brewery is based in Leuven, Belgium.

National Bank of Canada bonds

National Bank of Canada sold $1 billion of 1.65% three-year covered bonds at mid-swaps plus 35 bps, or Treasuries plus 62.2 bps, a source close to the deal said.

The bonds (Aaa/AAA/AAA) were priced under Rule 144A.

Barclays Capital Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. Inc. and National Bank Financial were bookrunners.

National Bank of Canada's notes firmed in the secondary market to 61.5 bps bid, 58.5 bps offer, a trader said.

The financial services company is based in Montreal.

Georgia Pacific narrows

Georgia-Pacific and other bonds in the paper and packaging sector were active on news of Rock-Tenn Co.'s deal to acquire Smurfit-Stone Container for about $3.5 billion, including $700 million of the target's debt, in cash and stock, sources said.

"We did see a movement in some of the paper names off of the Smurfit-Stone news, but it was more leveraged names that traded," a trader said, mentioning NewPage Corp.

Georgia-Pacific's notes have firmed 65 bps in secondary trading since they priced on Oct. 27 in the company's first bond sale since 2001, another trader said.

The Atlanta-based pulp and paper company sold $1.25 billion of the split-rated 5.4% 10-year senior notes (Ba2/BBB/BB+) at Treasuries plus 275 bps.

"Early this morning, they were offered at 210, didn't see any bids," the trader said.

"Georgia-Pacific trades so tight," said one trader who quit following the company. "Generally, the paper space has been very strong right out of the chute this year. While it is much less liquid, there was a little bit more yield, so we've seen names in the month of January up 3, 4, 5 [basis] points."

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