National Life Insurance, Zions Bank price bonds; Citigroup, Barclays, Markel trade tighter

By Andrea Heisinger

New York, Sept. 18 - National Life Insurance Co. and Zions Bancorporation each sold bonds on a relatively quiet Friday that gave investment-grade syndicate desks a chance to catch up after a busy week.

National Life Insurance did a small, upsized $200 million in 30-year surplus notes. The size was increased from $150 million.

Zions Bank priced an increased $450 million of 7.75% five-year senior notes after the deal went overnight. It was originally at $300 million, a source away from the deal said.

Recent bonds in both the non-financial and financial sectors were trading better, although some more than others.

Those priced Thursday by Markel Corp. and Kimco Realty Corp. were improved from the previous day's pricing, although Markel improved much more than Kimco.

Financial bonds from Citigroup Inc. and Barclays Bank plc blew them both out of the water in terms of tightening. Both issues were 20 to 25 bps tighter a day after selling.

Spreads were tighter almost across the board as Treasury yields widened by the end of the day. The five-year note was 8 basis points wider at 2.45%, and the 30-year bond was out 5 bps to 4.22%, a source said.

Zions Bank ups five-year

Zions Bancorporation priced an upsized $450 million of 7.75% five-year senior notes to yield 11.25%. The notes have a spread of Treasuries plus 880.1 bps but priced at the yield.

The size was initially $300 million, a source said Thursday when the sale was announced. It went overnight to allow investors a better look at the name, because it is an infrequent issuer.

Deutsche Bank Securities Inc. and Goldman Sachs & Co. ran the books.

Proceeds will be used for repayment of $295.63 million in floating-rate senior notes due Dec. 10, 2009 and for general corporate purposes.

The financial holding company is based in Salt Lake City.

National Life offers surplus notes

National Life Insurance priced an upsized $200 million in 30-year surplus notes at par to yield 10.5%, an informed source said.

The Rule 144A notes have a spread of Treasuries plus 631.3 bps.

The size was initially $150 million, the source said.

Barclays Capital and Goldman Sachs were bookrunners.

The life insurance provider is a subsidiary of National Life Group and based in Montpelier, Vt.

Coming week's volume high

New deals should continue to flow into the primary market in the coming week, market sources said on Friday after a hectic week.

"Liquidity is heating up," a secondary source said. "People are looking for cash, and they're going to keep selling [bonds]."

A syndicate source said that "there is no sign of issuance stopping. Things still look good."

There are no specific deals lined up for the coming week, but with a positive tone and billions of dollars in new deals pricing in the past days, it is unlikely there will be a slow day in the coming week.

"I don't know if it will be busy [on Monday]," the syndicate source said. "There are a lot of companies needing capital."

Recent non-bank bonds improve

Some recent issues from non-bank names were quoted better across the board by late in the afternoon, a trader said.

The new 7.125% bond due 2019 from specialty insurance provider Markel sold at 375 bps over Treasuries and was quoted Friday at 360 bps bid, 350 bps offered, the trader said.

He quoted the new Kimco Realty 6.875% notes due 2019 at 343 bps bid, 339 bps offered. This was in nicely from their price of 350 bps over Treasuries on Thursday.

Bonds from Exelon Generation Co. LLC sold two days previously were hovering around the pricing levels.

The 6.25% note due 2039 was the better performing of the two tranches from the deal. It sold at Treasuries plus 200 bps and was trading at 192 bps bid, 191 bps offered.

The 5.2% bond due 2019 was trading at 174 bps bid, 170 bps offered, which was little changed from its 175 bps over Treasuries price.

A new note sold Friday by National Life Insurance was not seen trading, the trader said. "It was a small size, 144A," he said. "It was probably put away already."

Citi, Barclays bonds tighter

Bonds sold Thursday by Citigroup and Barclays Bank were each tighter by 20 bps or more a day later, a trader said.

The Citigroup 5.5% note due 2014 was quoted at 303 bps bid, 300 bps offered. This was 25 to 30 bps better than the price of 325 bps over Treasuries.

The new 5% note due 2016 from Barclays was sold at 200 bps over Treasuries and was trading 20 to 25 bps tighter at 180 bps bid, 175 bps offered.

Non-financial sector trades quiet

A trader in the non-financial sector said that the day began busy, but volume dropped off by the afternoon as people left in preparation of the holiday.

"People are trying to sell," he said. "They want to buy new paper." New issues dominated much of the week, he said, adding that he has "seen a lot of bid-wanted lists" from people in previous days.

"The focus was definitely on the new deals," he said.

Abbott Labs, JPMorgan bonds popular

Investors bought a lot of bonds from Abbott Laboratories and JPMorgan Chase & Co. by early afternoon, a trader said.

The 5.125% note due 2019 from Abbott was the most-heavily traded. One of the company's units, Ibis Biosciences, was given the 2009 Wall Street Journal Technology Innovations award, according to a press release from Friday.

JPMorgan's 6.3% note due 2019 followed the Abbott bond for volume. The financial services company sold an upsized $1.5 billion of bonds due 2015 on Wednesday and was among many deals from big banks throughout the week.

A new bond from Shell International Finance BV was also highly traded. The 4.3% note due 2019 was trading at heavy volume. It priced as part of a four-tranche, $5 billion sale on Tuesday.

Bank, broker CDS mostly unchanged

Credit-default swaps for bank and brokerage names were unchanged to slightly wider, a trader in that sector said late in the day.

Banks were unchanged to 5 bps wider, he said, while brokerages were unchanged.

Wellpoint, Citi, GE bonds among movers

There were several big names among the bonds whose spreads made the largest moves from the previous week by the end of Friday.

Insurance provider WellPoint Inc. saw its 6.375% note due 2037 tighten about 25 bps from a week ago. The company's shares were upgraded to a buy earlier in the day by an analyst at Citigroup.

General Electric Capital Corp. had two of its bonds moving in opposite directions. Its 5.375% note due 2016 was nearly 20 bps wider than a week ago, while a 5% bond due 2011 was more than 20 bps tighter. This comes a couple of days after the financial arm of General Electric sold $600 million of six-year notes without the guarantee of the Federal Deposit Insurance Corp.

Also going about 20 bps wider was a 5.125% note due 2014 from Citigroup.

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