Progress Energy, Talisman Energy, Murphy Oil, Protective Life access primary; secondary weaker

By Andrea Heisinger and Cristal Cody

New York, May 15 - The primary side of the high-grade market was well stocked on Tuesday, mostly with small deals from energy names.

Progress Energy Carolinas, Inc., Murphy Oil Corp., Talisman Energy Inc., Oncor Electric Delivery Co. LLC and Gulf Power Co. each priced bond offerings. Most totaled less than $1 billion.

The day's largest sale came from Progress Energy, which sold $1 billion split evenly between notes due 2022 and 2042.

Oncor Electric sold $900 million of bonds divided between tranches due 2022 and 2042. The deal was done under Rule 144A and Regulation S, and the full terms were not available at press time.

Murphy Oil priced $500 million of 10-year notes to repay borrowings under a revolving credit facility. Another oil company, Talisman Energy, sold $600 million of 30-year bonds.

Gulf Power offered $100 million of 10-year paper to redeem outstanding issues.

There was a new issue from Protective Life Corp. announced and priced in the $25-par bond market. The $250 million sale of subordinated debentures was upsized from $150 million.

Although the primary was dominated by the energy sector, there wasn't any particular reason for it.

"It was just a coincidence," a market source said. "There wasn't a run on energy names or anything."

The steady stream of new bonds should continue on Thursday as a handful of names look at the market conditions at the open.

"I know we have a couple of trades. Nothing major," a syndicate source said.

Bonds traded wider for a second day on Tuesday. The Markit CDX Series 18 North American Investment Grade index eased 2 basis points to a spread of 117 bps.

Corporates overall were "very weak," a trader said. "Everything's pretty sloppy."

Most of the new issues priced late in the day and were not seen initially in secondary trading going into the close, according to traders.

Progress Energy Carolinas' two tranches traded 1 bp better.

Murphy Oil's issue traded wrapped around the issue price.

Investment-grade bank and brokerage credit default swaps costs were higher on Tuesday.

Bank of America's CDS costs rose 10 bps to 300 bps bid, 310 bps offered. Citi's CDS costs traded 10 bps higher at 258 bps bid, 268 bps offered. JPMorgan's CDS costs rose 6 bps to 145 bps bid, 150 bps offered. Wells Fargo's CDS costs increased 5 bps to 117 bps bid, 122 bps offered.

On the brokerage side, Merrill Lynch's CDS costs climbed 15 bps to 315 bps bid, 330 bps offered. Morgan Stanley's CDS costs traded 15 bps higher at 422 bps bid, 432 bps offered. Goldman Sachs' CDS costs were seen 15 bps higher at 325 bps bid, 335 bps offered.

Treasuries closed mostly unchanged on the day. The benchmark 10-year note yield was flat at 1.73%. The 30-year bond yield fell 1 bp to 2.91%.

Progress Energy prices

Progress Energy Carolinas, which does business as Carolina Power & Light Co., priced $1 billion of first mortgage bonds (Baa2/BBB/) in two parts, a source close to the deal said.

There was about $3 billion of demand for the trade, the source said.

The $500 million of 2.8% 10-year notes priced at a spread of Treasuries plus 105 bps. The notes sold at the low end of talk in the 105 bps to 110 bps range.

A second part was $500 million of 4.1% 30-year bonds sold at a spread of 120 bps over Treasuries. The bonds were priced at the tight end of guidance between 120 bps and 125 bps.

Goldman Sachs & Co., Mitsubishi UFJ Securities (USA) Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds are being used to retire at maturity $500 million of 6.5% notes due July 15, 2012 and to repay a portion of short-term debt.

Progress Energy Carolinas' bonds due 2022 were seen in the secondary market at 104 bps bid, 102 bps offered, a trader said.

The 30-year tranche traded at 119 bps bid, 117 bps offered.

The electric utility is based in Raleigh, N.C.

Murphy Oil's 10-year

Murphy Oil sold $500 million of 4% 10-year senior notes (Baa3/BBB/) at a spread of Treasuries plus 225 bps, an informed source said.

J.P. Morgan Securities LLC and Wells Fargo were the bookrunners.

Proceeds are being used to repay borrowings under a revolving credit facility and for general corporate purposes.

In secondary trading, Murphy Oil's notes due 2022 stayed mostly flat at 225 bps bid, 222 bps offered, a trader said.

The oil and gas exploration and production company is based in El Dorado, Ark.

Talisman sells $600 million

Canada's Talisman Energy priced a $600 million deal of 5.5% 30-year bonds (Baa2/BBB/) at a spread of Treasuries plus 270 bps, a market source said.

The bonds were priced at the low end of guidance in the 275 bps area, plus or minus 5 bps, the source said.

There was about $1.4 billion of demand on the books.

The size of the trade wasn't necessarily upsized, the source said, but went out in the morning as a benchmark, which is $500 million.

Citigroup Global Markets Inc. and JPMorgan were the active bookrunners.

Proceeds are being used for general corporate purposes including capital expenditures and debt repayment.

The upstream oil and gas company is based in Calgary, Alta.

Protective Life's debentures

Protective Life announced and priced a $250 million sale of 6.25% 30-year subordinated debentures (Baa3/BBB/) at par of $25, an informed source said.

The size was originally $150 million but was upsized in the afternoon, a market source said.

Talk was between 6.25% and 6.375%, and the debentures were sold at the tight end of that range.

Wells Fargo was the active bookrunner.

Proceeds are being used to redeem one or more of the $100 million of 7.5% trust originated preferred securities due 2031 issued by PLC Capital Trust III, the $115 million of 7.25% trust originated preferred securities due 2032 issued by PLC Capital Trust IV and the $200 million of 7.25% capital securities due 2066 issued by Protective Life.

Protective Life provides financial services, insurance and investment products and is based in Birmingham, Ala.

Gulf Power prices $100 million

Gulf Power sold $100 million of 3.1% 10-year senior notes, series 2012A, (A3/A/A) to yield Treasuries plus 135 bps, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were Citigroup and Morgan Stanley.

Proceeds are going toward the redemption of all or a portion of $61 million of series F 5.6% senior insured quarterly notes due April 1, 2033 and/or $60 million of series H 5.25% notes due July 15, 2033. The proceeds may also be used to repay a portion of short-term debt totaling $94 million and for general corporate purposes including the company's continuous construction program.

The electric subsidiary of Southern Co. is based in Pensacola, Fla.

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