Citigroup, AGL Capital, Magellan Midstream, Mack-Cali, Nationwide Mutual provide new supply

By Andrea Heisinger

New York, Aug. 5 - It was a smooth day in the investment-grade bond market Wednesday, with Citigroup Inc., AGL Capital Corp., Mack-Cali Realty LP, Nationwide Mutual Insurance Co. and Magellan Midstream Partners LP announcing and pricing bonds will little trouble.

One market source called it a "perfect day." It's likely the flow will slow in the next two days as supply dwindles.

New and recent bonds did well in the secondary market, traders said Wednesday.

The new Citigroup bond tightened about 20 to 25 basis points and took the focus off the new General Electric Capital Corp. bond from Tuesday.

AGL and Magellan Midstream bonds each tightened in trading, while the new Dow Chemical Co. bonds were significantly better.

Spreads continued to tighten by late afternoon as Treasury yields remained wider. The 10-year note was out 10 bps from the previous day, to yield 3.76%. The five-year note was 3 bps worse at a 2.72% yield.

AGL Capital upsizes deal

Atlanta-based AGL Capital issued an upsized $300 million in 5.25% 10-year senior notes at Treasuries plus 162.5 bps.

The size was initially $250 million, a source said.

The bond had "just under $2 billion" on the books, a source close to the sale said. It was talked in the 175 bps area, with a margin of 12.5 bps, and priced at the tight end of that level.

Goldman Sachs & Co., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities were the bookrunners.

Proceeds will be used for general corporate purposes, including repaying a portion of short-term debt.

The issuer is a subsidiary of natural gas company AGL Resources Inc.

Nationwide Mutual prices $700 million

Nationwide Mutual Insurance priced $700 million 9.375% 30-year surplus notes to yield 9.375%, an informed source said.

The Rule 144A notes priced at a spread of Treasuries plus 481.1 basis points.

The deal was initially talked with a yield in the 9.5% area, with a margin of plus or minus 12.5 bps, the source said. It launched at 9.375%.

There was about $2.5 billion on the books, the source added.

Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and Wells Fargo Securities ran the books.

The insurance and financial services company is based in Columbus, Ohio.

Mack-Cali offers $250 million

Mack-Cali Realty Corp. subsidiary Mack-Cali Realty priced $250 million 7.75% 10-year notes to yield 7.875%, or Treasuries plus 411.5 bps.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and JPMorgan.

Proceeds will be used for general corporate purposes, including purchasing or retiring outstanding notes.

The building sales and management company is based in Edison, N.J.

Citi sells five-year

Citigroup priced $2.5 billion 6.375% five-year senior notes at Treasuries plus 380 bps, an informed source said.

The bonds came in on the tighter end of talk of 387.5 bps, plus or minus 12.5 bps, the source said.

The sale was heavily oversubscribed, he said.

Citigroup was the bookrunner.

The financial services company is based in New York City.

Primary gets smooth day

New deals mostly went off without a hitch Wednesday as they flowed into the market and mostly priced easily, a source said.

"It was a perfect day," he said. "Everything went smoothly, and [the day] was not off to a slow start."

He referenced the previous day, when a three-tranche deal from FirstEnergy Solutions Corp. took most of the day to price despite being announced early.

The two deals the source worked on were "well oversubscribed, tightened from [price] whispers" and "did well when they were free to trade," he said.

It's likely things will slow on Thursday, as the week's calendar is diminished.

"We got a lot done today - took a big chunk out," a market source said. "I would expect [desks] would have a lot left."

He seemed pleased with the success of the Citigroup sale, which was away from him.

"I would say that was kind of the focus once it was announced," he said. "Everyone wanted to know where it would price."

Magellan Midstream reopens 10-year

Petroleum pipeline operator Magellan Midstream Partners reopened its 6.55% senior notes due 2019 to add $250 million.

The notes priced at a spread of Treasuries plus 185 bps.

Total issuance is $550 million, including $300 million priced June 19 at 280 bps over Treasuries.

JPMorgan was the bookrunner.

Proceeds are going to repay borrowings under a revolving credit facility and for general corporate purposes.

The issuer is based in Tulsa, Okla.

Dow Chemical bonds gain solidly

Two of the three tranches of new notes from Dow Chemical were impressively tighter in trading late Wednesday, a trader said.

The 4.85% bond due 2012 sold at 312.5 bps over Treasuries and was seen at 260 bps bid, 245 bps offered, making a gain of more than 50 bps.

The 5.9% due 2015 was not quite as stellar but came in to 313 bps bid, 307 bps offered from the Treasuries plus 325 bps pricing level.

The bond due 2012 was at 307 bps bid soon after selling Tuesday, while the 2015 was at 320 bps.

Citigroup takes financial trading focus

The 6.375% bond due 2014 from Citigroup was the focus of the financial trading sector late Tuesday, a trader said.

The bond tightened 20 to 25 bps to 360 bps bid, 355 bps offered from the price of Treasuries plus 380 bps.

Once this bond hit the secondary market, the focus of its sector shifted from the previous day's General Electric Capital Corp. bond, the trader said.

Both of these bonds were "pretty much where the focus has been, unfortunately," he said.

GE Capital bond better

GE Capital's 6% bond due 2019 priced on Tuesday and managed to gain nicely by late Wednesday, a trader said.

It was sold at Treasuries plus 235 bps and was quoted at 212 bps bid, 209 bps offered. Any further gains, and investor interest, were thwarted once the Citigroup bond came into the market, the trader said.

AGL bond little changed

The new 5.25% due 2019 from AGL Capital shifted little from its price of 162.5 bps over Treasuries, a trader said. It was quoted at 160 bps bid, 155 bps offered late Wednesday.

Reopened Magellan tightens

The reopened 6.55% bond due 2019 from Magellan Midstream was only slightly better in the secondary, a trader said.

The bonds were priced at 185 bps over Treasuries but were trading 5 to 10 bps tighter at 179 bps bid, 175 bps offered.

FirstEnergy tranches improve

The three tranches of notes priced Tuesday by FirstEnergy Solutions were improved across the board, a trader said.

The 4.8% bond due 2015 was one of the best performers, tightening to 175 bps bid, 170 bps offered Wednesday from the price of Treasuries plus 212.5 bps.

The 6.05% bond due 2021 was in about 15 bps to 215 bps offered from the price of 237.5 bps over Treasuries.

The tranche of 6.8% bonds due 2039 was doing well at 201 bps offered. It priced at 237.5 bps over Treasuries.

Coca-Cola bond gains

The 4.5% bond due 2019 from Coca-Cola Enterprises Inc. was about 10 bps better than its price of 90 bps over Treasuries, a trader said late Wednesday.

The paper was quoted at 80 bps bid, 79 bps offered, which was better than its quote the previous day of 82 bps bid, 79 bps offered.

Dow, Citi bonds top trading

Outstanding bonds from Dow Chemical and Citigroup were among the top traded by early afternoon, a trader said.

Dow's popularity comes a day after it successfully sold a deal in three tranches that was "severely oversubscribed," as a source close to the sale said.

The chemical company's 8.55% due 2019 was topping trading.

Citigroup successfully priced an offering of five-year notes Wednesday and saw its outstanding 8.5% due 2019 trading heavily.

Bank, broker CDS better

Credit-default swaps for bank and brokerage names were unchanged to 5 bps better, a trader said.

Altria, ArcelorMittal bonds move

Bonds from tobacco company Altria Group Inc. and steel maker ArcelorMittal SA were among the day's biggest shifting from the previous week's levels. Both reported second-quarter earnings at the end of July.

Altria's 7.75% bond due 2014 was about 40 bps better than a week ago, after it reported a solid quarter.

ArcelorMittal's 6.125% due 2018 was about 20 bps wider than a week ago. It reported a loss of nearly $800 million for the last quarter.

A Citigroup 5.625% bond due 2012 was improved as the financial firm successfully sold $2.5 billion in new bonds Wednesday. The outstanding bond was more than 30 bps tighter.

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