Santander Holdings prices amidst 'cautious' tone; new paper tightens in secondary market

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Aug. 22 - A deal from Santander Holdings USA Inc. managed to make its way to the high-grade primary market on Thursday, according to a syndicate source.

The source noted a "cautious" tone to the market during the session, as players continue to focus on the volatility in Treasury yields.

The 10-year note reached a two-year high of 2.93%, according to a trader on Thursday, and fell to 2.89% to close the session.

In high-grade primary action, Santander priced $500 million of 3.45% senior notes due Aug. 27, 2018 with a spread of Treasuries plus 180 basis points, according to an informed source.

The deal priced tight of talk, which was set in the area of 185 bps over Treasuries.

This deal brought the corporate high-grade issuance total to roughly $4.2 billion for the week, according to Prospect News data, slightly lower than the $5 billion sources had predicted.

There was also a $3 billion deal from Sweden during Thursday's session.

Sweden came to market with the 1% three-year notes with a spread of mid-swaps minus 3 bps, according to a company release.

In the secondary market, Santander's new senior notes tightened 8 bps going out on Thursday, a trader said.

Southern Co.'s 2.45% senior notes due 2018 traded more than 5 bps better than where it priced on Wednesday, according to traders.

Abbey National Treasury Services plc's 3.05% senior notes due 2018 eased slightly from early trading on Thursday, but remains tighter than issuance, a trader said.

The Markit CDX Series 20 North American Investment Grade index tightened over the day and headed out 3 bps firmer at a spread of 81 bps.

Investment-grade bank and brokerage CDS costs also declined, a market source said.

Santander prices tight

Santander Holdings USA sold $500 million of 3.45% senior unsecured notes due Aug. 27, 2018 with a spread of Treasuries plus 180 bps, according to an informed source and a FWP filing with the Securities and Exchange Commission.

The deal priced tight of talk.

Pricing was at 99.818 to yield 3.49%.

In the secondary market, Santander's new senior notes firmed to 172 bps bid, a trader said.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Santander and U.S. Bancorp Investments were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Boston-based Santander Holdings USA is the parent company of Sovereign Bank. It is a subsidiary of Spain's Banco Santander, SA.

Sweden sells three-years

Also on Thursday, Sweden sold $3 billion 1% three-year notes on Thursday with a spread of mid-swaps minus 3 bps, according to a company release.

The notes priced at 99.834 to yield 1.053% or Treasuries plus 22.75 bps.

The final book for the deal was $3.3 billion.

Banks bought 54% of the deal. Central banks bought 30%, while the balance went to asset managers and others.

Investors in Europe bought around 64% of the bond, while 28% was sold to the Americas and 6% to the Middle East and Africa. The balance was sold in Asia.

Southern better

Southern's 2.45% senior notes due 2018 (Baa1/A-/A) tightened to 87 bps bid, 84 bps offered going out on Thursday, a trader said.

The notes traded at 88 bps bid, 85 bps offered in the morning session.

The Atlanta-based utility company priced $500 million of the notes at a spread of Treasuries plus 93 bps on Wednesday.

Abbey slightly wider

Abbey National's 3.05% senior notes due 2018 edged wider in late afternoon trading, a source said.

The notes (A2/A/A) went out at 148 bps bid, 143 bps offered.

In the morning session, the issue traded at 145 bps bid, 142 bps offered.

The London-based financial services company sold $1 billion of the notes at a spread of Treasuries plus 155 bps on Tuesday.

Bank CDS costs decline

Investment-grade bank and brokerage CDS costs declined on Thursday, a market source said.

Bank of America Corp.'s CDS costs firmed 3 bps to 113 bps bid, 117 bps offered. Citigroup Inc.'s CDS costs tightened 3 bps to 106 bps bid, 110 bps offered. JPMorgan Chase & Co.'s CDS costs closed 4 bps tighter at 85 bps bid, 89 bps offered. Wells Fargo & Co.'s CDS costs firmed 3 bps to 65 bps bid, 69 bps offered.

Merrill Lynch's CDS costs tightened 2 bps to 109 bps bid, 116 bps offered. Morgan Stanley's CDS costs dropped 3 bps to 145 bps bid, 149 bps offered. Goldman Sachs Group, Inc.'s CDS costs declined 3 bps to 135 bps bid, 139 bps offered.

Paul Deckelman contributed to this review

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