HSBC, SLM sell new deals; HSBC firms; Spectra Energy notes mixed; Peco Energy flat

By Cristal Cody and Aleesia Forni

Virginia Beach, Sept. 17 - A small crop of issuers came to Tuesday's market, squeezing in before the wrap-up of the Federal Open Market Committee's two-day meeting on Wednesday.

SLM Corp., HSBC USA Inc. and Enel SpA brought new deals during what one syndicate source described as "another positive session."

SLM priced a crossover deal on Tuesday, selling an upsized $1.25 billion of 5.5% notes due 2019 on top of talk.

Pricing was at 98.877 to yield 5.75%.

There was also a new deal from Enel, which sold $1.25 billion of 8.75% 60-year senior notes at 99.183 to yield 8.875%.

Meanwhile, HSBC came to market with a two-tranche offering of five-year notes, according to an FWP filing with the Securities and Exchange Commission.

The bank sold $750 million of 2.625% notes at Treasuries plus 105 basis points and $250 million floaters at par to yield Libor plus 88 bps.

Activity is expected to be muted on Wednesday, with the market focused on the outcome of the FOMC meeting.

So far this week, new issuance has reached more than $11 billion.

Sources had predicted the week's total to reach between $15 billion to $20 billion of new high-grade paper.

Investment-grade bonds traded about 3 bps to 5 bps better in general after opening wider in light activity on the first day of the two-day FOMC meeting, market sources said.

"With the Fed announcement looming tomorrow, activity has grinded to a halt," a trader said. "The past two days, things are as much as 7 bps better in some specific circumstances."

The Markit CDX Series 20 North American Investment Grade index tightened 2 bps to a spread of 73 bps.

HSBC's new fixed-rate senior notes due 2018 traded 4 bps better in the secondary market late Tuesday afternoon, a trader said.

Spectra Energy Partners LP's new issue was mixed, with the short-dated notes weaker and the long tranche about 3 bps tighter, according to a market source.

Peco Energy Co.'s first and refunding mortgage bonds remained flat in trading on Tuesday, according to a trader.

SLM sells crossovers

Tuesday's primary saw SLM price an upsized $1.25 billion offering of 5.5% notes (Ba1/BBB-/BB+) due Jan. 15, 2019, according to an informed source.

Pricing was on top of talk.

The notes priced at 98.877 to yield 5.75%.

J.P. Morgan Securities LLC, BofA Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The provider of education loans is based in Newark, Del.

Enel prices senior notes

In other primary action, Enel SpA priced $1.25 billion of 8.75% senior subordinated notes due 2073 at 99.183 to yield 8.875%, according to a market source.

BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., Mitsubishi UFJ Securities, Credit Suisse Securities, Goldman Sachs & Co., Morgan Stanley & Co. LLC and Mizuho Securities were the bookrunners for the Rule 144A only deal.

Enel is a Rome-based electric utility company.

HSBC's two-parter

HSBC priced a two-part offering of five-year senior notes (A2/A+/AA-) on Tuesday, according to an FWP filing with the SEC.

The bank priced $750 million of 2.625% five-year notes with a spread of Treasuries plus 105 bps, or 99.828, to yield 2.662%.

HSBC's new fixed-rate senior notes due 2018 traded tighter at 101 bps bid, 96 bps offered, according to a trader.

There was also $250 million of floating-rate notes sold at par to yield Libor plus 88 bps.

HSBC Securities (USA) Inc. is the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

Spectra Energy mixed

Spectra Energy's senior notes (Baa3/BBB/BBB) sold on Monday in a $1.9 billion three-tranche offering traded mixed in Tuesday's secondary market, a trader said.

The tranche of 4.75% notes due 2024 eased to 192 bps bid, 190 bps offered. Spectra Energy sold $1 billion of the notes at a spread of Treasuries plus 190 bps.

The Houston-based natural gas transmission and production company's 5.95% notes due 2043 firmed to 202 bps bid, 199 bps offered. The long bonds priced in a $400 million offering at Treasuries plus 205 bps.

Peco Energy flat

In other new issue trading, Peco Energy's 4.8% first and refunding mortgage bonds due 2043 were unchanged on the bid side at 93 bps bid, 89 bps offered, a trader said.

The bonds (A1/A-/A) went out wrapped around issuance on Monday after the Philadelphia-based electric and natural gas transmission Exelon subsidiary sold $550 million of the issue at a spread of Treasuries plus 93 bps, according to sources.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS costs ended tighter on Tuesday, according to a market source.

Bank of America Corp.'s CDS costs declined 2 bps to 98 bps bid, 102 bps offered. Citigroup Inc.'s CDS costs tightened 2 bps to 89 bps bid, 93 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 80 bps bid, 84 bps offered. Wells Fargo & Co.'s CDS costs declined 2 bps to 57 bps bid, 61 bps offered.

Merrill Lynch's CDS costs tightened 2 bps to 93 bps bid, 98 bps offered. Morgan Stanley's CDS went out 2 bps tighter at 127 bps bid, 132 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 119 bps bid, 123 bps offered.

Paul Deckelman contributed to this review

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