Sara Lee, Dominion Resources price paper; primary slows; secondary flat; DirecTV debt widens

By Andrea Heisinger and Cristal Cody

New York, Aug. 30 - Sara Lee Corp. and Dominion Resources, Inc. kept the flow of new high-grade paper going on Monday as each priced deals.

Dominion sold its $250 million of five-year notes by early afternoon. The notes priced at the tight end of guidance.

The two-tranche sale from Sara Lee took longer to get done. It ended up at $800 million of five-year and-10-year notes, both of which priced tighter than initial guidance.

The company doesn't have any recent outstanding bonds off which to price, so that was one of the reasons for the relatively small deal taking most of the day to price, a source said.

"I think it was announced a little later [in the morning] too," she said.

Tuesday could be the busiest day of the week if market conditions hold, although it's possible there could only be a couple more deals sold for the day, sources said.

The secondary market set a "slow pace" on Monday, a source said.

A trader said it was a "slow secondary" for the day.

Overall investment-grade Trace volume fell 13% to less than $7 billion, according to a market source.

"We started out a couple basis points wider this afternoon and have come off that now," another trader said. "It's pretty much unchanged from Friday. It looks like the new sales are coming out, but [investors] are basically bidding where it priced and offering five basis points tighter."

The new issues from Sara Lee and Dominion Resources both firmed less than 5 bps in the secondary market, according to sources.

Elsewhere in the secondary, DirecTV Holdings LLC's 4.6% senior unsecured notes (Baa2/BBB/BBB-) sold earlier in August widened out on Monday, a source said.

Treasuries recovered and sent yields down after Friday's big selloff.

The yield on the 10-year note fell to 2.53% from 2.64%. The yield on the 30-year bond fell 11 basis points to 3.58%.

Investors sold off Treasuries on Friday after Federal Reserve Chairman Ben Bernanke indicated that the government planned no immediate additional bond purchases.

"Given the amount of data we have this week, things could definitely be volatile," Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co., said of the upcoming employment and nonfarm payroll reports.

"People want to own the markets, but they don't want to chase it."

Sara Lee sells $800 million

Sara Lee priced $800 million of senior unsecured notes (Baa1/BBB/BBB) late in the afternoon split evenly between two tranches, an informed source said.

The $400 million of 2.75% five-year notes priced at a spread of Treasuries plus 137 bps. This was tighter than initial talk in the mid-140 bps area, the source said.

A second tranche of $400 million of 4.1% 10-year notes sold at 157 bps over Treasuries. The notes priced tighter than guidance in the mid-160 bps area.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities and BNP Paribas Securities.

Proceeds will help fund the $1.1 billion purchase of 2011 notes tendered and accepted for payment in a tender offer and to redeem all 2011 notes not purchased in that tender offer.

The company decided to tap the market this week "to get in ahead of the holiday," a source said late in the day.

"The market looked OK after assessing the open, so they went for it. They needed to sell to fund the tender."

The consumer food products company is based in Downers Grove, Ill.

Tone 'OK' for day

There are more deals expected ahead of the long Labor Day weekend, but "nothing too crazy," as one market source had said early in the day.

"I think it's going to be people needing to get something [funded] ahead of the weekend," she said. "We're not going to see as much opportunistic [issuance]."

Names from a variety of sectors could price this week.

"I've heard [...] that volume should be similar to last week," one syndicate source said at the end of the day, adding that his desk had no deals planned for the week.

He added that the tone was "a little heavy" in the morning, which may have led some issuers to hold off until Tuesday or Wednesday.

Dominion prices five-years

Dominion Resources sold $250 million of 2.25% five-year senior notes (Baa2/A-/BBB+) at a spread of 90 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

The notes priced at the tight end of guidance in the range of 90 to 95 bps, a source away from the sale said.

Deutsche Bank Securities, Morgan Stanley & Co. Inc. and UBS Investment Bank ran the books.

Proceeds are being used for general corporate purposes and to prefund projected fourth-quarter capital needs. This includes prefunding a portion of the redemption at maturity of $200 million of 6% debentures due on Oct. 15 and $300 million of 4.75% senior notes due Dec. 15.

According to Prospect News data, Dominion last sold senior notes in a $600 million deal of 8.875% 10-year notes on Nov. 25, 2008 at 678.9 bps. The company has not recently sold five-year notes.

The power and energy company is based in Richmond, Va.

Sara Lee tighter in secondary

Sara Lee's two new tranches of five- and 10-year notes tightened in the secondary market, according to sources.

The 2.75% notes due 2015 priced at Treasuries plus 137 bps. The five-year tranche was seen tightening on the bid side at 133 bps, one trader said.

Later in the afternoon, another trader saw the notes at 136 bps bid, 132 bps offered.

The 4.1% notes due 2020 priced at Treasuries plus 157 bps. The 10-year notes firmed to 155 bps bid, 153 bps offered, a trader said. Another source saw the notes due 2020 at 156 bps bid.

"The only thing I've seen trading on it has been similar bids for decent size," a trader said.

Dominion Resources firms

In secondary trading, Dominion Resources' new 2.25% notes due 2015 immediately firmed to 87 bps bid, 85 bps offered after pricing at Treasuries plus 90 bps, a trader said.

Another trader saw the notes tighter at 86 bps bid, 85 bps offered.

Near the market close, the notes were quoted wider at 88 bps bid, 86 bps offered, a source said.

DirecTV weaker

DirecTV's high-grade debt widened out in the secondary market, a source said.

The 4.6% senior unsecured notes (Baa2/BBB/BBB-) due 2021 were quoted trading early in the day at 179 bps. By late afternoon, the notes had moved out to 188 bps bid, 184 bps offered, the source said.

DirecTV priced the notes on Aug. 10 at a spread of Treasuries plus 185 basis points.

The satellite TV and digital entertainment provider is based in El Segundo, Calif.

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