Viacom sells bonds as recent influx of new deals is absorbed; Wal-Mart widens, telecoms firm

By Andrea Heisinger and Cristal Cody

New York, March 24 - The flow of new paper into the high-grade market slowed considerably on Thursday after two days of heavy issuance.

The lone issuer in the primary was media company Viacom Inc. with a $500 million sale of six-year notes. They were priced at the tight end of guidance, a source said.

Beyond the desks involved in that sale, others worked to mop up from three days of a packed market.

"We needed to absorb [the bonds]," said one market source.

The market has already far surpassed expectations of $15 billion to $20 billion from the end of the previous week.

One syndicate source called Thursday "a day of relief" as deals subsided.

"I think yesterday was exciting enough for everybody," she said, calling the Verizon Communications, Inc. $6.25 billion mega-deal "a nice surprise."

It was the second huge deal of the week following Sanofi-aventis SA's $7 billion sale on Tuesday. Both the Sanofi and Verizon deals involved nearly every syndicate desk in some capacity because of their size and number of tranches.

Friday is not expected to have a large amount of new deals.

Overall investment-grade Trace volume dipped 3% to about $16.8 billion, a market source said.

In secondary trading, AT&T Inc.'s bonds were "grinding back" on Thursday, one trader said. Verizon's bonds also traded about 5 basis points tighter, a source said.

In the retail sector, Wal-Mart Stores Inc.'s bonds moved out, a source said.

In other data, the series 15 Markit CDX North American Investment Grade index firmed 2 bps to a spread of 95 bps, according to Markit Group Ltd.

Treasuries ended Thursday weaker, sending yields up. The 10-year note yield rose 6 bps to 3.4%. The 30-year bond also was softer, sending the yield up 4 bps to 4.48%.

"On the longer end, you're having the flight to quality bid evaporating," said Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co. "Stocks are higher, oil is a little bit lower, the market seems to be discounting what's going on in Europe, and the situation in Japan remains very grave, but the reactors are not melting down."

Viacom's $500 million sale

Viacom priced $500 million of 3.5% six-year senior notes (Baa1/BBB+/BBB+) at a spread of Treasuries plus 155 bps, said a source away from the trade.

They were sold at the lowest end of talk in the range of 155 to 160 bps.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were active bookrunners.

Proceeds will be used for general corporate purposes. These could possibly include repayment of borrowings under a commercial paper program and the scheduled maturity of 5.75% notes due in April and stock share repurchases.

Viacom last priced bonds in a $500 million sale of 4.5% senior notes due 2021 on Feb. 14. Those sold at 110 bps over Treasuries.

The media company is based in New York.

Cades gives five-year terms

La Caisse d'Amortissement de la Dette Sociale priced $2.5 billion of 2.375% five-year notes to yield Treasuries plus 44.95 bps, or mid-swaps plus 22 bps, on Wednesday, a market source said.

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

Bookrunners were Credit Suisse Securities LLC, Goldman Sachs & Co., HSBC Securities and Merrill Lynch, Pierce, Fenner & Smith Inc.

The French debt agency is based in Paris.

Societe Generale's reopening

Paris-based Societe Generale reopened its issue of 2.5% notes due 2014 late on Wednesday to add $130 million, a market source said.

The notes (Aa2/A+/A+) priced at Treasuries plus 150 bps. They were priced under Rule 144A.

Total issuance is $1.13 billion including $1 billion sold on Dec. 8, 2010 at 158 bps over Treasuries.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities, Morgan Stanley & Co. Inc. and Societe Generale.

The issuer is a financial services company.

Telecoms firm

AT&T's bonds were "doing OK" in trading on Thursday, a trader said.

The 5.8% notes due 2019 traded 2 bps tighter at 70 bps over Treasuries.

Dallas-based AT&T's bonds had eased 10 to 15 bps earlier in the week after it announced it would take over T-Mobile USA, news that sent most telecom bonds wider.

Elsewhere in the sector, another source said Verizon's notes were stronger. The company's 6.35% notes due 2019 narrowed 5 bps to 85 bps.

Verizon's 6.25% bonds due 2037 also traded tighter at 154 bps from 160 bps on Wednesday, the source said.

Wal-Mart widens

Wal-Mart's bonds widened in secondary trading, but they remain firmer since they priced last year, a source said.

Wal-Mart's 3.25% notes due 2020 widened 3 bps to 63 bps and the 5% bonds due 2040 widened to 102 bps from 91 bps on Wednesday, the source said.

Both tranches were sold on Oct. 18. The notes due 2020 were sold at a spread of 78 bps. The long bonds priced at 115 bps over Treasuries.

The discount retailer is based in Bentonville, Ark.

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