Morgan Stanley sells post-earnings; Fifth Third, CIBC tap market; new debt firms in trading

By Andrea Heisinger and Cristal Cody

New York, Jan. 20 - Morgan Stanley, Fifth Third Bancorp, South Carolina Electric & Gas Co., Nordic Investment Bank, Canadian Imperial Bank of Commerce and the Province of Ontario priced notes on Thursday in a day again dominated by financial and sovereign names amid earnings announcements.

The first sale to price for the day was $250 million of 30-year first mortgage bonds from South Carolina Electric & Gas.

Fifth Third Bancorp priced $1 billion of five-year notes to help finance the repurchase of preferred stock shares from the U.S. Department of the Treasury that were sold in the Troubled Asset Relief Program.

Two bond deals from financials priced late in the day.

One was a $5.25 billion sale in three parts by Morgan Stanley. The company priced a three-year floater, a three-year fixed-rate note and a 10-year tranche, all of which came in line with guidance.

A covered bond deal came from CIBC. The financial sold $2 billion of five-year bonds under Rule 144A.

American Airlines, Inc. priced $657.032 million of class A & B pass-through trust certificates off the high-grade syndicate desk. The class B certificates are junk-rated.

The late-day sale from Morgan Stanley wasn't a surprise, but the size was.

"I don't think we were expecting quite that much," a market source away from the sale said. "I heard it was well subscribed, too."

The offering was announced after the company's earnings were released in the morning.

The day's overall market tone "didn't matter much," said another source, as many companies are still sidelined by earnings, leaving sovereigns and foreign names to access the market.

"Tomorrow should be quiet, unless BofA gets in," the source said. Bank of America Corp. announces its earnings on Friday.

Overall investment-grade Trace volume rose 16% to more than $16 billion on Thursday, a market source said.

South Carolina Electric & Gas' notes firmed in secondary trading, while American Airlines' two tranches of certificates traded higher, traders said.

The Markit CDX Series 14 North American investment-grade index eased 1 point, closing at a spread of 85 bps, a source said.

Treasuries sank, sending yields climbing after a weak auction of $13 billion of 10-year Treasury Inflation-Protected Securities and stronger economic data.

The 10-year note yield closed out the day at 3.45%, compared to 3.34% on Wednesday. The 30-year bond yield rose 8 bps to 4.61%.

Morgan Stanley's late sale

Morgan Stanley sold $5.25 billion of notes (A2/A/A) in three parts late in the day, said a source away from the offering.

The sale came after a morning fourth-quarter earnings announcement of $600 million for the bank and a yearly profit of $3.6 billion. This comes after upbeat earnings from Citigroup Inc. earlier in the week.

The $1.5 billion of three-year floating-rate notes priced at par to yield Libor plus 160 bps.

A $1 billion tranche of 2.875% three-year notes priced at a spread of Treasuries plus 187.5 bps.

The final tranche was $2.75 billion of 5.75% 10-year notes priced at Treasuries plus 237.5 bps.

All of the tranches priced in line with guidance.

Morgan Stanley & Co. Inc. was bookrunner.

The tranches were quoted trading tighter in the gray market.

The three-year floating-rate notes were seen trading in the gray market at 155 bps bid, 153 bps offered, a trader said.

The three-year fixed-rate notes were quoted at an offer of 183 bps in the gray market.

Also in the gray market, Morgan Stanley's third tranche of 10-year notes traded at 234 bps bid, 230 bps offered.

The financial services company is based in New York City.

Fifth Third sells $1 billion

Fifth Third Bancorp priced $1 billion of 3.625% five-year notes (Baa1/BBB/A-) at a spread of Treasuries plus 160 bps, an informed source said.

The sale was announced in a press release late Wednesday, along with the pricing of $1.7 billion of common stock.

J.P. Morgan Securities Inc., Barclays Capital Inc. and Morgan Stanley & Co. Inc. were bookrunners.

Proceeds are being used, along with the common stock share sales and cash at hand, to repurchase 136,320 of series F preferred stock shares. If the preferred stock is not repurchased, proceeds will be used for general corporate purposes.

In trading, an offer of 153 bps was seen on the notes due 2016, a trader said.

The financial services holding company is based in Cincinnati.

S.C. E&G sells 30-years

South Carolina Electric & Gas priced $250 million of 5.45% 30-year first mortgage bonds (A3/A/A) by early afternoon to yield Treasuries plus 90 bps, according to an FWP filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, BB&T Capital Markets, Credit Suisse Securities (USA) LLC and TD Securities (USA) LLC were bookrunners.

Proceeds are being used to retire 6.7% mortgage bonds due Feb. 1, 2011, to repay short-term debt incurred as a result of the company's construction program, to finance capital expenditures and for general corporate purposes.

The bonds due 2041 were stronger late afternoon in the secondary, trading at 87 bps bid to 84 bps-85 bps offered, traders said.

The subsidiary of energy holding company Scana Corp. is based in Cayce, S.C.

NIB's global notes

Nordic Investment Bank priced $1 billion of 2.25% five-year global notes (Aaa/AAA), according to an FWP filing with the SEC.

Deutsche Bank AG London branch, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were bookrunners.

The financier for five Nordic countries is based in Helsinki, Finland.

CIBC offers covered bond

Canadian Imperial Bank of Commerce sold $2 billion of 2.75% five-year covered bonds (Aaa/AAA) late in the day at a spread of Treasuries plus 71.8 bps, a source away from the sale said well after the market close.

The bonds were priced under Rule 144A.

CIBC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and RBS Securities Inc. were bookrunners.

The chartered bank and financial services company is based in Toronto.

Ontario sells upsized deal

The Province of Ontario (Aa1/AA-/DBRS: AA) sold an upsized $3.5 billion of 1.375% three-year global senior notes at 45.85 bps, or 18 bps over mid-swaps, an informed source said.

The deal was upsized from an initial $3 billion and talked in the area of 18 bps over mid-swaps.

Deutsche Bank Securities Inc., HSBC Capital (Canada) Inc., J.P Morgan Securities LLC and RBC Capital Markets Corp. were the managers.

Pass-throughs from AMR

American Airlines priced $657.032 million of class A and B pass-through certificates, according to an FWP filing with the SEC.

The sale is guaranteed by parent company AMR Corp.

The $503.206 million of 5.25% 10-year class A certificates (Baa3/A-) priced at par to yield 5.25%.

The $153.826 million of 7% seven-year class B certificates (B1/BB+) sold at par to yield 7%.

Goldman Sachs & Co., Deutsche Bank Securities Inc. and Morgan Stanley & Co. Inc. were bookrunners.

Proceeds are being used to buy several Boeing aircraft.

Both tranches traded higher in the secondary market, according to traders.

The class A certificates due 2018 traded up to 100.25 bid, 101.5 offer. The class B certificates due 2021 were seen in the secondary at 100.125 bid, 100.875 offer.

The commercial airline is based in Fort Worth, Texas.

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