Hewlett-Packard, Westpac, Panhandle, Gulfstream price; Lorillard eyes deal; new deals tighten

By Andrea Heisinger

New York, May 21 - A handful of companies, including Hewlett-Packard Co., Westpac Securities NZ Ltd., Panhandle Eastern Pipe Line, LP and Gulfstream Natural Gas System, LLC, priced last-minute deals Thursday in order to get in before the long holiday weekend.

Cigarette maker Lorillard, Inc. also announced a possible debt offering in a press release, with timing and other details depending on market conditions.

Deals in the non-financial sector of the secondary market were "unchanged to a little wider" by the close of trading, a trader said.

Gulfstream's notes and a bond priced Wednesday by Nordstrom, Inc. were each nicely tighter, while the day's other sales priced too late or were too small to have trading levels.

Spreads were generally tighter by late afternoon as Treasury yields widened. The 10-year note and 30-year bond were hit hard, each widening 18 basis points. The five-year note widened 13 bps from the previous day.

Hewlett-Packard upsizes offering

Computer and printer maker Hewlett-Packard priced three tranches of global notes totaling $2 billion late Thursday. The sale was originally in two tranches, a source said.

A $750 million tranche of two-year floating-rate notes priced at par to yield three-month Libor plus 105 bps.

The remaining two tranches were fixed-rate issues, with $1 billion of two-year notes pricing at 140 bps over Treasuries and $250 million of three-year notes being priced at Treasuries plus 160 bps.

Full terms were not available because of the lateness of pricing.

The issue comes on the day the company, based in Palo Alto, Calif., announced it is cutting 6,400 jobs following a dismal second quarter.

Banc of America Securities LLC, Credit Suisse Securities, Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and RBS Securities Inc. ran the books.

Panhandle increases sale

Houston-based Panhandle Eastern Pipe Line sold an upsized $150 million of 8.125% 10-year senior notes early Thursday at par to yield 8.125%. The notes have a spread of Treasuries plus 486.2 bps but priced at the yield, a source said.

The sale originally totaled $100 million, he said. It priced below initial price whisper of 8.25%, he added, and was between two- and three-times oversubscribed.

Proceeds will be initially loaned to parent company Southern Union, which will use the funds to repay a portion of debt under a revolving credit agreement. After being paid back, Panhandle will use the proceeds to repay $60.6 million of 6.5% notes due July 15, 2009, to fund capital and expenditures and for other general corporate purposes.

Wachovia Capital Markets LLC and RBC Capital Markets Corp. ran the books for the natural gas pipeline.

Gulfstream Natural Gas prices $300 million

Gulfstream Natural Gas System sold $300 million 6.95% seven-year notes early in the afternoon at 420 bps over Treasuries.

The deal was "pretty straightforward," a source close to it said. There was "nothing very exciting about it."

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were bookrunners for the natural gas delivery network, based in Tampa, Fla.

Westpac sells government-backed bond

New Zealand-based Westpac Securities sold $1.5 billion 2.5% three-year notes early Thursday at 80 bps over mid-swaps, an informed source said. The sale was guaranteed by the government of New Zealand and done via Rule 144A.

It was announced Wednesday but went overnight to let books build and give Asian investors a stab at it, the source said.

Barclays Capital, Citigroup and Westpac Securities were bookrunners.

The financial services company is based in Auckland.

Lorillard plans debt sale

Cigarette maker Lorillard is planning an unspecified debt issue, according to a press release Thursday.

The issue will be used to enhance the company's capital structure, to reduce the cost of capital and to improve shareholder returns, according to the release.

Lorillard has also received authorization from its board of directors to repurchase up to $250 million in common shares.

Proceeds from the debt sale will be used to fund an additional stock repurchase, for acquisitions, to fund dividends or for other general corporate purposes.

The deal's timing, structure and amount depends on the credit and interest rate environment, according to the release.

The third-largest cigarette manufacturer in the United States is based in Greensboro, N.C.

Primary looks to week ahead

Thursday was essentially the end of the week, a market source said, as the early market close Friday will mean "little to no issues."

"I think it should be pretty dead," he said. "Someone always tries to sneak something [in], but we'll see."

Market conditions were "decent" by late Thursday, but many companies and investors are likely waiting until Tuesday to get back into the primary.

It's somewhat up in the air as far as issuance for the coming week, but the consensus among syndicate desks Thursday was that the traditional post-Memorial Day slowdown may not happen this year.

"I think it should be active," a syndicate source said.

Gulfstream bond tightens sharply

The new 6.95% bond due 2016 from Gulfstream Natural Gas System was 20 to 40 bps tighter than its price of 420 bps over Treasuries, a trader said late Thursday.

The bond was trading at 398 bps bid, 380 bps offered.

Recent Nordstrom in nicely

Retailer Nordstrom, Inc.'s issue of 6.75% bonds due 2014 priced Wednesday were 20 to 30 bps tighter than their price of Treasuries plus 475 bps, a trader said. They were at 455 bps bid, 445 bps offered in the secondary by late afternoon.

Secondary slows

Issues in the secondary market were mostly "unchanged to a little wider" by the close of trading, a trader said. The new three-tranche sale from Hewlett-Packard was not seen in the secondary, he said, and others such as the new Panhandle Eastern were so small they were put away and were not trading.

Microsoft tops trading

A recently issued 10-year bond from Microsoft Corp. was one of the most popular of the day, as of early afternoon, a source said.

The 4.2% due 2019 was at the top. It was trailed by a 7.375% bond due 2014 from Bank of America Corp. that was issued without the backing of the Federal Deposit Insurance Corp.

The Microsoft bond was part of a multi-tranche issue that marked the computer and software giant's first foray into the corporate bond market. The sale was heavily oversubscribed.

The remainder of the most-traded list of the day was a mix of industrial and banking names, which is a break from a recent trend of domination by financials.

Recent non-FDIC deals gain

Bonds priced recently by financial names without the guarantee of the FDIC were uniformly tighter than their pricing levels early Thursday, a market source said.

An 8.5% bond due 2019 from Citigroup Inc. that priced May 15 was performing well at 497 bps bid, 492 bps offered after selling at Treasuries plus 562.5 bps.

Another recent deal priced May 14 by JPMorgan Chase & Co. was seen tighter, but not by a huge margin. The 4.65% notes due 2014 priced at 275 bps over Treasuries and was at levels of 253 bps bid, 248 bps offered.

Older issues from General Electric Capital Corp. and Bank of America have had more time to come in, and showed it.

The GE Capital 5.9% due 2014 priced on May 6 and was trading at 345 bps bid, 340 bps offered, hanging onto gains from the 387.5 bps price over Treasuries.

The Bank of America 7.375% bond due 2014 priced May 8 at 537.5 bps over Treasuries and was one of the best performing. It has come in more than 100 bps to 432 bps bid, 427 bps offered.

Bank, broker CDS mostly wider

Credit-default swaps for bank and brokerage names were unchanged to wider late Thursday, a trader said.

The cost to insure banks was out 10 to 15 bps, while brokers were a little better, sitting at unchanged to 15 bps wider, the trader said.

Financials top big movers

Bonds from National City Bank and diversified holding company Loews Corp. were some of the day's largest movers, a source said. A bond from Citigroup also moved in by a large margin from the previous week.

National City's 6.25% bond due 2011was more than 90 bps tighter than its previous level. Bank and financial names have mostly tightened week by week following the bank stress test result release on May 7.

Citigroup's 6.5% due 2013 was nearly 80 bps better than a week ago by late Thursday.

Not performing as well was Loews, whose 6% bond due 2035 was more than 30 bps wider.

Recent bond issues from Principal Financial Group and BP Capital Markets were also high on the list, moving out from levels a week ago.

Principal's 7.875% due 2014 was about 25 bps wider, with BP Capital's 3.625% due 2014 widening about 20 bps.

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