Gazprom sells 10-year bonds; volume to rise in coming week; StatoilHydro bonds trade solidly

By Andrea Heisinger

New York, April 17 - The week ended much as it began, with little in the way of new deals Friday. A sale from Russia's OAO Gazprom was alone in the investment-grade primary market.

The two-week slowdown is expected to at least partially subside in the coming week as earnings blackouts end, sources said.

In the secondary market, a recent two-tranche issue from StatoilHydro ASA continued solid gains, with the five-year note particularly strong.

Trading volume was thin in both the financial and non-financial sectors, traders said.

Spreads were considerably tighter by late Friday as Treasury yields widened from the previous day's levels. The five-year note jumped up 12 basis points to yield 1.89%, and the 10-year note was up 11 bps to yield 2.94%.

Bank earnings continue

Two more financial names announced positive earnings Friday, following in the footsteps of JPMorgan Chase & Co., Wells Fargo & Co. and Goldman Sachs & Co.

None of them influenced the primary market much, sources said. An issue of bonds from JPMorgan Chase on Thursday, following the earnings announcement, became one of the market's high points of the week as it was not backed by the Federal Deposit Insurance Corp. It boosted other banks' older, non-FDIC issues to the top of trading volume that day.

Other than that there wasn't much noticeable impact on either side of the market.

On Friday, a syndicate source said that "it was pretty much expected," in reference to the positive earnings. "It didn't really help any deals get done."

The coming week is expected to pick up in new issue volume as financial and industrial names continue to come out of earnings blackouts.

"It should be busier," a source said. "People are coming back [from vacation]. There's probably a backlog."

Gazprom sells 10 year

In the only high-profile deal priced Friday, Russia's OAO Gazprom sold $2.25 billion of 9.25% 10-year notes at par.

The notes priced via Rule 144A and Regulation S.

Credit Suisse ran the books.

The sale was announced the previous week but had to wait until the conclusion of a roadshow to price. The roadshow began April 13.

JPMorgan non-FDIC bond up

The 6.3% bond due 2019 from JPMorgan Chase was continuing gains in the secondary by late Friday, a trader said.

It almost immediately tightened about 10 bps after pricing Thursday at Treasuries plus 350 bps. On Friday it was at 338 bps bid, 335 bps offered.

Statoil bonds make strong gains

The new five- and 10-year bonds from StatoilHydro each continued strong gains from the previous day's levels after pricing, a trader said.

The 3.875% due 2014 was the best-performing. It priced at Treasuries plus 220 bps and was trading at 178 bps bid, 172 bps offered.

The 5.25% due 2019 was better than its previous day's level. It priced at Treasuries plus 245 bps and was trading at 220 bps bid, 212 bps offered. This was a modest gain from Thursday's 225 bps bid, 220 bps offered.

The non-financial sector of the secondary was "dead," a trader said. There was "absolutely nothing going on" by later afternoon, he added.

Citi, GE bonds tighten

Outstanding bonds from both Citigroup and General Electric Capital Corp. were "a little tighter" late Friday, a trader said, after they both announced first-quarter earnings earlier in the day.

There were no specific levels available for these two issuers, but the trader added that the financial sector of the secondary was "very quiet."

Both Citi and General Electric announced a profit for the first quarter.

Target tops trading

A bond from Target Corp. was at the top of trading volume early Friday afternoon, a market source said.

The retailer's 6% bond due 2018 was at the top, breaking the streak of financial names that have proved popular with investors in light of earnings announcements.

Target did not announce earnings Friday, but an analyst said they are on track for a flat April of comparable sales, according to Reuters. They had a lower-than-predicted drop in retail sales for March.

HSBC, Alcoa big movers

HSBC Finance Corp. had one of the day's biggest moving bonds by late Friday, with its 7% bond due 2012 lifted more than 90 bps from the previous week. It was riding the improved tone for the banking sector after positive earnings announcements throughout the week.

Alcoa Inc.'s 6% bond due 2012 was more than 30 bps wider than the previous week, when the aluminum company announced a loss for the first quarter.

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