Key, Toyota price; Ryder counts recent issue successful; Credit Suisse revises pricing on buyer pressure

By Andrea Heisinger and Paul Deckelman

Omaha, Feb. 20 - New investment-grade issues from KeyCorp Capital Trust X and Toyota Motor Credit Corp. were about the only action on a quiet Wednesday.

In the investment-grade secondary market Wednesday, declining issues led advancers by a three-to-two ratio, while overall market activity, reflected in dollar volumes, jumped 34% from the levels seen Tuesday.

Traders said that overall, things were not very much moved, although here and there were individual exceptions.

The new Ryder System, Inc. bonds priced Wednesday were seen continuing their initial pattern of aftermarket strength.

Despite considerable activity in the equity of such telecommunications names of AT&T Inc., Verizon Communications and SprintNexel, with stock investors fearing a possible price war in the companies' respective wireless services, their bonds were little changed.

KeyCorp sells trust preferreds

KeyCorp priced $700 million in 8% 60-year enhanced trust preferred securities at par of $25. They are non-callable for five years.

Bookrunners were Citigroup Global Markets Inc. and Wachovia Capital Securities LLC.

Toyota priced $170 million in two-year floating-rate notes at par to yield three-months Libor plus 3 basis points.

Morgan Stanley & Co. Inc. was agent.

Ryder 'pleased' with deal

Tuesday's issue from Ryder System, Inc. went well by trader's standards, being five times oversubscribed, and by the company's.

Senior vice president of finance and treasurer Dan Susik said Wednesday that the reception from investors was substantial.

"I was pleased because it allowed us to tighten the spread accordingly," he said.

Although the deal drew strong interest, there was no consideration of increasing the size of the $250 million issue, Susik said, as the company had chosen a targeted size.

Coming to the market with five-year notes is practical for the company, he said.

"If you look at Ryder, historically, we issue between three and 10-year notes," he said.

The five-year notes make sense because that is generally the average time their vehicles are leased, he said.

This issue will be used to retire short-term debt balances.

"We were very pleased with the reception of this," Susik said. "There were not a robust number of issuers in the market and this allowed the attention to be focused on us."

There were more than 40 investors in on the deal.

Credit Suisse repriced

Pricing on last week's $2 billion issue of 10-year notes from Credit Suisse received a make over after investors called for it.

The company announced larger than expected write-downs after the issue had priced on Feb. 13, but before its settlement Tuesday.

The coupon on the notes increased 25 bps to 6% from 5.75%, with the dollar price at 99.671 plus accrued interest from Feb. 19 to Feb. 20. The spread increased to 237.5 bps from 212.5 bps.

Credit Suisse was bookrunner.

"They caved to investor pressure after that kind of substantial information," a market source said.

This type of price revision is not common.

"I can't remember the last time it happened," he said. "I've been through deals where it was talked about, but nothing came of it."

The quiet week sources had predicted remained a reality Wednesday, and will likely continue the rest of the week.

"It's definitely quiet, but it won't last forever," a source said. "The market is sitting still until it sees two or three days of stability."

Market rebounds from initial losses

"For all of the big moves we saw in mortgages, equities and Treasuries," a trader said, "it was actually somewhat more muted in investment-grade land, We did see some bids getting hit early on, when we saw swap spreads gap out, but by the end of the day, the intra-day move was 10 [bps] tighter."

He saw swap spreads out about 5 to 6 bps, on average, earlier in the session, but ended up tightening about 5 or 6 bps on the day, "so after some bids got hit early on, we saw spreads grind tighter the rest of the day."

He added that "dealers remain light - and block-size does remain elusive."

Ryder little moved on the day

He said that he "really didn't see too much" going on in the new 6% bonds of Ryder Systems, which priced on Tuesday at 312.5 basis points over Treasuries. He heard that the bonds - which tightened to a closing level of 302 bps bid in Tuesday's aftermarket - had gotten as tight as 295 bps Wednesday, and estimated them going home at 302 bps bid, 297 bps offered

Telecoms hold steady

The trader saw "weakness early on" in bonds of telcos like AT&T, Verizon and Sprint, "but spreads hung in there. So, the weakness was limited to 2 to 3 bps."

He saw the 10-year Verizon bonds go home quoted at 186 bps bid, 182 bps offered, while its 30-year bonds were at 190 bps bid, 186 bps offered.

"For the most part, you saw stuff [widen] out early on and then recover most of that throughout the course of the day," he said

CDS spreads widen, a little

Another trader saw the credit-default swaps spreads a bit wider on the day, saying major-bank debt-protection costs were out 3 bps to 5 bps, while brokerage names were actually 10 bps narrower, including Bear Stearns & Co.

In the monoline bond insurers, he saw industry leader MBIA's AAA debt-protection costs "in 35" bps at 375 bps bid, 395 bps offered.

Rival insurer Ambac's AAA debt being protected had CDS costs of 380 bps, 405 bps offered, which he said was in by 25 bps.

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