Goldman Sachs reopens notes; banks lose ground in trading; new bonds mixed in secondary

By Andrea Heisinger

New York, March 19 - Goldman Sachs Group Inc. was the only entrant into the high-grade market on Friday following a busy previous day.

The financial services company reopened a bond due 2020 to add $750 million. This was increased from a planned $500 million addition.

That was the extent of action in the primary market. The coming week will have deals, "some sizeable," a source said. None have formally been announced, and it's unclear if they will price at the top of the week.

"It depends on how Monday looks," a syndicate source said.

The secondary market on Friday saw financial bonds wider. New and reopened notes from JPMorgan Chase & Co., Credit Suisse AG, New York branch and Goldman Sachs Group either gave up gains they made soon after selling, or were slightly tighter.

A three-tranche sale from Hartford Financial Services Group Inc. that priced late on Thursday was mostly wider to unchanged in trading, a source said.

The notes priced the previous day by energy company Shell International Finance BV were mixed in the secondary, a trader said, with the longest bond moving wider.

The source blamed several factors for the stop to the recent weeks of tighter spreads in the bank and financial sectors.

Trading volume was fairly light for the day as many were focused on more pressing issues, such as the NCAA basketball tournament.

"Corporates were pretty quiet today," a source said.

Goldman Sachs reopens 10-year

Goldman Sachs Group reopened its issue of 5.375% notes due 2020 early in the day to add an upsized $750 million, an informed source said.

The reopening was intended to add $500 million. It comes on the heels of two successful deals from Credit Suisse AG, NY branch and JPMorgan Chase & Co. on Thursday. The two-tranche sale from JPMorgan included a reopening of a tranche of notes originally sold in 2009.

The reopened Goldman notes (A1/A/A+) priced at a spread of Treasuries plus 175 bps.

Total issuance is $2.75 billion, including $2 billion priced on March 1 at 190 bps over Treasuries.

Goldman Sachs & Co. ran the books.

The financial services company is based in New York City.

Coming week seen steady

A lack of deals to end the week meant many desks were clearing early and looking at the week ahead. That week is looking "moderately busy," a source said.

"I know we have a couple of things, and I'm hearing of a couple more away," he said.

It's possible the top of the week could be busy, provided the tone feels right on Monday morning. There will not be a Federal Reserve meeting to gum up issuance, as there was at the beginning of the previous week.

One source said the market should "see some things in the corporate space," after the end of a week heavy with bonds in the financial sector.

Financial bonds give back gains in trading

After several days of continued tightening in the financial sector of the secondary - particularly in bank bonds - many of the recent non-industrial bonds priced Thursday gave up gains in trading.

A trader in the sector said there were a variety of reasons for the poor performance by some of the previous day's deals.

The Hartford Financial Services tranches were perhaps the worst performing. They priced too late on Thursday to see real trading, but were seen slightly tighter in the gray. By Friday, all three bonds were quoted as slightly wider.

Credit Suisse and JPMorgan Chase bonds managed to stay slightly tighter than where they priced, but were at higher levels than where they were quoted the previous day.

The reopened Goldman Sachs bond also hardly moved from where it was sold.

"The equity market's down," a trader said in late afternoon. "We've had a lot of new issues in the financial space."

Financial bonds have been "up in the last two weeks," he said, adding that it was inevitable they would stop tightening at some point.

There were also a "lot of distractions out there," he said, listing the health care debate and the NCAA basketball tournament among them.

Hartford bonds trade wider

Three bonds priced late the previous day by Hartford Financial Services were wider in trading late Friday, a trader said.

The 4% bond due 2015 gave up some gains and was wider than where it priced at 160 bps over Treasuries. It was quoted at 170 bps bid, 165 bps offered. They were offered at 155 bps in the gray on Thursday.

The 5.5% note due 2020 was quoted at 189 bps bid and 185 bps offered. This was unchanged to wider from its price of 185 bps over Treasuries. It had tightened to an offer of 177 bps in the gray.

The third tranche of 6.625% bonds due 2040 were sold at Treasuries plus 205 and traded wider to unchanged at a 207 bps bid, 204 bps offer. They had previously tightened to a bid of 202 bps and offer of 198 bps.

Reopened Goldman 10-year tighter

A bond reopened early in the afternoon by Goldman Sachs was tighter once it hit the secondary, a source said. The 5.375% bond due 2020 was reopened to add $750 million and was priced at 175 bps over Treasuries. It soon tightened to 173 bps bid and an offer of 168 bps.

Shell bonds trade mixed

Three bonds priced by Shell International late the previous day had made little gains from where they were after pricing, a trader said.

The short 1.875% note due 2013 fared the best after pricing at 42 bps over Treasuries. It was seen at an offer of 33 bps.

"Everyone wants the short paper," the source said.

A tranche of 4.375% notes due 2020 was priced at 77 bps over Treasuries and was quoted as unchanged at 77 bps bid, 73 bps offered.

A third tranche of 5.5% bonds due 2040 was slightly wider to unchanged from its Treasuries plus 95 bps price. It was seen at 96 bps bid, 92 bps offered.

Credit Suisse, NY branch bond improves

Credit Suisse AG sold a 3.5% note due 2015 on Thursday through its New York branch, and that bond was slightly improved in trading.

A trader quoted it at a bid of 110 bps and offer of 106 bps, which is tighter than its price of 112.5 bps over Treasuries.

JPMorgan new, reopened bonds mostly better

JPMorgan Chase sold two tranches of bonds the previous day: one reopened and one new. The reopened 3.7% bond due 2015 fared better than the new 4.95% note due 2020 in trading, a source said.

The reopened five-year was priced at 110 bps over Treasuries and was trading at 105 bps bid, 100 bps offered. That was slightly worse than its offer of 98 bps soon after it priced Thursday.

The 10-year note was mostly unchanged from its price of Treasuries plus 127.5 bps, trading at 127 bps bid, 123 bps offered. It was offered at 122 bps the previous day.

Axis Specialty 10-year tightens, then disappears

A new bond priced quietly on Thursday by Axis Specialty Finance LLC was seen offered slightly tighter on Friday morning, then mostly vanished from the secondary.

A trader quoted the 5.875% note due 2020 at an offer of 221 bps, which is slightly better than its price of 225 bps over Treasuries.

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