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New deals keep rolling in as investment-grade market remains stable; New Johnson & Johnson tighter
By Andrea Heisinger
Omaha, Aug. 14 - A semblance of stability remained in investment-grade trading Tuesday as more new deals priced.
One trader thought longer maturity bonds would be trading better Tuesday, but people were staying short.
"People are keeping their eye on the equity market for direction," a market source said.
All of Monday's new deals were trading at tighter spreads.
This included the three tranches of Johnson & Johnson's $2.6 billion deal. The tranches of five year, 10 year and 30-year notes were each trading a basis point or two tighter, according to a market source.
The notes in the $500 million deal Safeway Inc. deal priced at 158 bps over Treasury, and were trading between 153 and 155 bps Wednesday.
Among Tuesday's deals was a short $1.75 billion offering of two-year floating-rate notes for Wachovia Corp. The notes priced at par to yield three-month Libor plus 16 bps.
The bookrunner on the deal was Wachovia Capital Markets, LLC.
Also pricing was a two-tranche, $500 million deal of senior notes (Baa1/BBB+) from Gulf South Pipeline Co., LP, according to a market source.
The $225 million tranche of 5.75% five-year notes priced at a spread of 130 bps with price talk in the 130 bps area, the source said. The $275 million tranche of 6.30% 10-year notes priced at a spread of 160 bps, with talk in the 160 bps area.
Bookrunners on the deal were Citigroup Global Markets Inc. and Morgan Stanley.
More new deals can be expected in the coming days, a market source said, barring market conditions worsening.
"Spreads are still vulnerable and hard to gauge," the source said. "Unlike two or three months ago where you could tell within a couple of basis points where things would price."
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