Primary empty as bank earnings begin; week ahead front-loaded; bank paper, telecoms widen

By Andrea Heisinger and Cristal Cody

New York, April 13 - The week got off to a slow start and also ended with no new deals Friday as banks began reporting first-quarter earnings.

JPMorgan Chase & Co. and Wells Fargo & Co. both gave Q1 numbers Friday morning, each meeting or exceeding analyst expectations.

Wells Fargo showed earnings of $21.6 billion while JPMorgan saw $26.7 billion in revenue for the quarter. Both showed higher earnings than in the first quarter a year ago.

The positive numbers did nothing to entice companies into the market, which showed weakness throughout the week on headlines out of Europe and other factors.

There was about $3.388 billion of bonds sold in 10 deals in the past week, according to data compiled by Prospect News. The total was less than the modest $5 billion to $10 billion expected.

The coming week is expected to see the same issuance volume range of $5 billion to $10 billion, a source said late Friday.

"Should be pretty light," the source said. "We have several deals - mostly on the front end."

A syndicate source agreed, saying there should be between $5 billion and $8 billion in deals for the coming week.

"We have three potential trades, or three non-financials," he said. "We also have a couple of financials."

Deals are expected to be frontloaded in the first half of the week, although the primary will "definitely be quiet," the syndicate source said.

"There's still earnings blackouts going on and all that," he said, adding that there is about $50 billion in issuance expected for the month of April.

Investment-grade bonds traded mostly wider in light market activity. The Markit CDX Series 18 North American investment-grade index eased 5 basis points to a spread of 102 bps.

"It's been very quiet," a trader said.

Bank and financial paper widened 5 bps to 15 bps in the secondary market.

Leading the weakness, Morgan Stanley's 5.5% notes due 2021 eased 15 bps on the day to 415 bps bid, 405 bps offered, a trader said.

Investment-grade bank and brokerage credit default swaps costs widened, a source said.

Banks were 15 bps to 5 bps wider, while brokers widened 16 bps to 11 bps.

Cable and telecom bonds traded 5 bps to 10 bps weaker.

CenturyLink, Inc.'s notes due 2022 widened 10 bps over the day.

AT&T, Inc.'s 10-year notes eased 3 bps.

The new issues sold over the week traded mostly tighter, including John Deere Capital Corp.'s two tranches of bonds that are 4 bps to 6 bps better in the secondary market.

Other new deals firmer in trading include the issues from Ventas Realty, LP and Ventas Capital Corp. and Kroger Co.

Treasuries rose on Friday pushing yields down on the longer end of the curve. The 10-year note yield fell to 1.98% from 2.05%. The 30-year bond yield dropped to 3.13% from 3.21%.

CenturyLink widens

CenturyLink's senior notes due 2022 widened 10 bps to 405 bps bid, 395 bps offered, a trader said on Friday.

The company sold $1.4 billion of the notes (Baa3/BB/BBB-) on March 5 at a spread of Treasuries plus 380 bps.

The broadband and telecommunications company is based in Monroe, La.

AT&T eases

In other trading, AT&T's 3% notes due 2022 eased 3 bps to 105 bps bid, 100 bps offered, a trader said.

AT&T sold the notes (A2/A-/A) on Feb. 8 at Treasuries plus 105 bps.

The communications company is based in Dallas.

John Deere firms

John Deere Capital's $1 billion of medium-term notes (A2/A/) priced the previous day traded better on Friday, a source said.

The 0.875% notes due 2015 firmed to 43 bps bid, 40 bps offered. The $500 million tranche priced at a spread of Treasuries plus 47 bps.

The 2.25% notes due 2019 traded in to 81 bps bid, 76 bps offered. The $500 million tranche of seven-year paper priced at Treasuries plus 87 bps.

The funding arm of agricultural and industrial equipment maker and distributor John Deere is based in Moline, Ill.

Ventas tightens

The 4% notes due 2019 that Ventas Realty and Ventas Capital sold on Thursday firmed in secondary trading to 256 bps bid, 251 bps offered, a trader said on Friday.

Ventas Realty and Ventas Capital sold $600 million of the seven-year senior notes (Baa2/BBB/BBB+) to yield 265 bps over Treasuries.

The real estate investment trust for senior housing and health care properties is based in Chicago.

Kroger firms

Kroger's two tranches of senior notes (Baa2/BBB/BBB) priced on Tuesday remain tighter in trading, a source said on Friday.

The food retailer's 3.4% notes due 2022 tightened to 139 bps bid, 136 bps offered. Kroger sold $500 million of the 10-year notes at a spread of Treasuries plus 150 bps.

The tranche of 5% bonds due 2042 has held tighter in trading at 187 bps bid, 183 bps offered over the week. Kroger sold $350 million of the 30-year bonds at Treasuries plus 190 bps.

The grocery retailer is based in Cincinnati.

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