Energy names Atmos, NextEra, NiSource monopolize stable primary; bonds mixed; Spectra firms

By Andrea Heisinger and Cristal Cody

New York, June 7 - Energy companies ruled in the high-grade market on Tuesday as Atmos Energy Corp., NextEra Energy Capital Holdings Inc. and NiSource Finance Corp. priced bonds.

Both NextEra and Atmos Energy upsized their bond sales.

Dallas-based Atmos priced $400 million of 30-year bonds at the tight end of guidance. The size of the deal was initially $300 million.

The size of the sale from NextEra was increased even more. The funding arm of an electric utility priced $400 million of 10-year notes. The size was first announced at $250 million.

NiSource priced $400 million of 30-year bonds in order to repay short-term bank borrowings. The notes sold at the wide end of price talk, a source said.

At least two of the day's deals were priced before Federal Reserve Chairman Ben Bernanke gave a speech about the U.S. economy.

Bernanke's comments that he sees slow economic growth "didn't really do anything" to the primary for the day since all three deals had been announced and mostly priced beforehand.

The tone remained "constructive," one syndicate source who worked on one of the sales said.

"There just isn't a big calendar [for the week]," he added.

Another market source said that they hadn't heard of many deals for Wednesday.

The syndicate source added that "people want IG paper, but it's whether there's any out there. Could be more BBBs."

Overall volume was stronger on Tuesday at about $13 billion.

"Best it's been in several days," a bond source said.

NextEra Energy's notes widened 7 basis points on the bid side in trading, and the two other energy deals were seen trading a basis point or two tighter in the secondary market, traders said.

The sector was flat on the day, one trader said. "It was the first time in a while that accounts were net sellers," the trader said. "But it looks like the market digested it, and spreads are going out pretty much unchanged."

Fiserv, Inc.'s two tranches of notes sold on Monday firmed in secondary trading, according to sources.

Spectra Energy Partners, LP's $500 million of senior notes (Baa3/BBB/BBB) sold in two tranches on Monday also tightened, traders said.

Treasuries closed flat to slightly higher on the longer end of the bond curve after a three-year note auction. The three-year note yield fell 3 bps to 0.69%. The benchmark 10-year note was unchanged at 2.99%.

Atmos Energy upsizes

Atmos Energy priced an upsized $400 million of 5.5% 30-year senior bonds (Baa1/BBB+/A-) at a spread of Treasuries plus 125 bps, said a source who worked on the trade.

The deal was initially announced at $300 million. The notes were sold at the tight end of guidance in the 130 bps area.

There was "massive" demand for the bonds, the source said. The books had about $2.5 billion on them.

"I think it's because they're infrequent," the source added. "It was a good deal. People were waiting for it."

BNP Paribas Securities Corp., Morgan Stanley & Co., Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds will be used to repay a substantial portion of outstanding commercial paper. Any remainder will be used for funding capital expenditures and general corporate purposes.

In secondary trading, "looks like Atmos' are 2 better than issue," one energy bond trader said.

The bonds were seen going out at 119 bps bid, 123 bps offered.

Two other traders saw the bonds trading around 125 bps bid, 121 bps offered.

The natural gas distribution, transmission and storage company is based in Dallas.

NextEra offers 10-year

NextEra Energy Capital Holdings sold an upsized $400 million of 4.5% 10-year debentures (Baa1/A-) to yield Treasuries plus 148 bps, according to an FWP filing with the Securities and Exchange Commission.

The size was increased from $250 million.

Bookrunners were Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Morgan Stanley and RBS Securities Inc.

Proceeds will be added to the company's general funds and used to repay a portion of outstanding commercial paper and for general corporate purposes.

The deal is guaranteed by NextEra Energy, Inc.

The bonds widened in the secondary.

"NextEra 10-year is underperforming," a trader said. The notes widened to 155 bps bid, 152 bps offered.

Later in the day, a trader on another desk quoted the notes at 155 bps bid, 150 bps offered.

The issuer provides electric service through its utility subsidiaries and is based in Juno Beach, Fla.

NiSource's $400 million

NiSource Finance sold $400 million of 30-year senior bonds (Baa3/BBB-/BBB-) at a spread of 170 bps over Treasuries, an informed source said.

The bonds were sold at the wide end of guidance in the 165 bps to 170 bps range.

Bookrunners were Scotia Capital (USA) Inc., U.S. Bancorp Investments Inc. and Wells Fargo.

Proceeds are being used to repay short-term bank borrowings under a revolving credit facility.

The notes are guaranteed by parent company NiSource Inc.

Closing out the day, the notes traded tighter at 168 bps bid, 166 bps offered, a trader said.

The energy holding company for electric and natural gas subsidiaries is based in Merrillville, Ind.

Fiserv firms

Fiserv's two tranches traded tighter in the late afternoon Tuesday, traders said.

The company priced an upsized $1 billion of senior notes (Baa2/BBB-) in two tranches on Monday.

The $600 million of 3.125% five-year notes were sold at a spread of 155 bps over Treasuries. In the secondary market, the notes due 2016 firmed to 152 bps bid, 151 bps offered by late afternoon, a trader said.

Early in the day, the notes were seen at 152 bps bid, 149 bps offered, another trader said.

Fiserv also sold a $400 million tranche of 4.75% 10-year notes at Treasuries plus 180 bps. The notes due 2021 tightened to 176 bps bid, 173 bps offered going out. In trading before noon, a trader saw the notes at 175 bps bid, 172 bps offered.

The financial services technology provider is based in Brookfield, Ill.

Spectra stronger

Spectra Energy's new bond deal firmed in secondary trading on Tuesday.

A $250 million tranche of 2.95% five-year notes was priced at a spread of Treasuries plus 140 bps. The notes due 2016 narrowed to 137 bps bid, 132 bps offered, a trader said.

Spectra's $250 million tranche of 4.6% notes due 2021 priced at a spread of Treasuries plus 160 bps and firmed to 155 bps bid, 153 bps offered, according to the trader. Another trader saw the 10-year notes trading around 154 bps.

The natural gas pipeline gathering and transportation company is based in Houston.

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