KfW sells floaters; session mostly quiet with desks thinly staffed; Santander trades better

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 23 - A mostly subdued market wrapped up the week on a quiet note with a single deal from KfW pricing during the session.

The German government-owned development bank sold $250 million of floating-rate notes due 2014.

Corporate high-grade issuance totaled roughly $4.3 billion for the week, according to Prospect News data, shy of predictions of a $5 billion week.

The week saw mostly higher rated corporate names bring smaller sized deals amidst climbing Treasuries yields and the release of the Federal Open Market Committee's minutes.

Looking to the week ahead, sources are expecting only a small number of deals for the days leading up to the extended Labor Day weekend, with many players out for vacation.

"May see a few [new issues]," one syndicate said late Friday, though he noted it will most likely be a "quiet, boring" week.

Sources are expecting primary activity to resume following the holiday weekend.

Investment-grade bonds tightened in secondary trading on light volume on Friday with many traders and market participants leaving early for the weekend, sources reported.

"It's dead around here," one source said.

The Markit CDX Series 20 North American Investment Grade index firmed 2 basis points to a spread of 79 bps.

In trading earlier in the day, Santander Holdings USA Inc.'s new 3.45% senior notes due 2018 were more than 10 bps better at 167 bps bid, a trader said.

Santander sold $500 million of the notes (Baa2/BBB/BBB) on Thursday at a spread of Treasuries plus 180 bps.

Boston-based Santander Holdings is the parent company of Sovereign Bank and a subsidiary of Spain's Banco Santander, SA.

KfW sells floaters

Friday's primary saw KfW price $250 million of floating-rate notes due Sept. 22, 2014 at par to yield the Federal Funds rate plus 7 bps, according to a 424B3 filing with the Securities and Exchange Commission.

There is no call option.

BNP Paribas Securities Corp. was the bookrunner.

The bank is based in Frankfurt.

CDS costs come in

Investment-grade bank and brokerage CDS costs tightened on Friday, a market source said.

Bank of America Corp.'s CDS costs firmed 6 bps to 106 bps bid, 111 bps offered. Citigroup Inc.'s CDS costs declined 4 bps to 99 bps bid, 104 bps offered. JPMorgan Chase & Co.'s CDS costs ended unchanged at 85 bps bid, 89 bps offered. Wells Fargo & Co.'s CDS costs firmed 2 bps to 62 bps bid, 66 bps offered.

Merrill Lynch's CDS costs tightened 6 bps to 102 bps bid, 109 bps offered. Morgan Stanley's CDS costs ended 5 bps lower at 139 bps bid, 144 bps offered. Goldman Sachs Group, Inc.'s CDS costs tightened 5 bps to 129 bps bid, 134 bps offered.

Paul Deckelman contributed to this review

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