Du Pont, FPL Group, SunTrust, ANZ price deals; HSBC plans FDIC-backed notes

By Andrea Heisinger and Paul Deckelman

New York, Dec. 9 - The volume of new issues was down slightly Tuesday, but still had a mix of government-backed and non-financial names including E.I. du Pont de Nemours and Co., SunTrust Bank, FPL Group Capital and ANZ Banking Group.

HSBC USA Inc. announced it plans to price an issue backed by the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

The day was "up," as one market source said, referring to the tone that remained mostly steady from Monday.

In the investment-grade secondary market Tuesday, advancing issues led decliners by a better than eight-to-five ratio. Overall market activity, reflected in dollar volumes, was up about 30% from Monday's pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year note fell by 11 basis points to 2.63%.

Du Pont prices $1 billion

Science-based products company E.I. du Pont priced $1 billion of 5.875% five-year notes at 99.531 to yield 5.981% with a spread of Treasuries plus 437 bps.

Banc of America Securities LLC, Goldman Sachs & Co. and Credit Suisse Securities ran the books.

The deal was well received, a source close to it said.

This was despite the company's recent announcement that it was laying off workers.

SunTrust does FDIC notes

SunTrust Bank priced $2.75 billion of FDIC-backed notes in two tranches.

The name had been tossed around last week as one of a handful that would price this week, a market source said.

The $750 million of two-year floating-rate notes priced at par to yield three-month Libor plus 65 bps.

The $2 billion of 3% three-year notes priced at 99.697 to yield 3.11% with a spread of Treasuries plus 197 bps.

SunTrust Robinson Humphrey, Morgan Stanley and UBS Investment Bank ran the books.

FPL does small deal

FPL Group Capital priced $450 million of 7.875% seven-year notes at par to yield 7.875%, with a spread of Treasuries plus 596 bps.

A source close to the deal said they priced at the tight end of talk, which was at a yield range of 7.8755 to 8%.

"It was well received," he said. "It was almost three-times oversubscribed. There was a lot of interest."

Bookrunners were Banc of America Securities LLC, Citigroup Global Markets Inc., Deutsche Bank Securities and Mizuho Securities.

ANZ does government notes

The government-backed notes have branched out to Australia, with ANZ Bank Group pricing $1.75 billion under this guarantee.

The notes are backed by the Australian government and priced under Rule 144A.

The $500 million of two-year floating-rate notes priced at par to yield three-month Libor plus 70 bps.

The second tranche of $1.25 billion of three-year notes priced at Treasuries plus 211 bps.

Banc of America Securities and J.P. Morgan Securities ran the books.

HSBC plans government deal

HSBC USA announced it plans to issue notes backed by the FDIC in a 424B5 Securities and Exchange Commission filing Tuesday.

The proceeds will be used for purposes including investments and advancements to subsidiaries, financing acquisitions and banking, according to the prospectus.

It is a self-led deal via HSBC Securities.

B of A reopens two notes

Bank of America Corp. gave terms Tuesday for two reopenings of notes backed by the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

The company reopened its three-year floaters with a coupon of one-month Libor plus 76 bps to add $1 billion.

The reopened notes priced at 100.146.

Total issuance is $1.5 billion, including $500 million issued Dec. 4.

The second reopening was for three-year floaters with a coupon of three-month Libor plus 82 bps.

They priced at 100.130.

The total issuance is $2.1 billion, including $750 million issued Dec. 4.

Bookrunner for both was Banc of America Securities LLC.

Co-managers were HSBC Securities, Loop Capital Markets and Cabrera Capital Markets.

New issues seen continued

The volume of new issues should stay steady until the Christmas holiday break, a source said Tuesday.

"This window's about to shut," he said. "Things are kind of smoothed out right now, and I think a lot of companies are going to jump in."

He explained that while conditions aren't ideal, there was some optimism to start the week.

"We had a decent day, and a lot of stuff got done," he said. "I don't know how long this will continue. I think it [issuance] will maybe calm down after the holidays."

After investment-grade issuers began braving the market again, it became a rush for some companies to price debt before the end of the year.

"They have what, one week or something?" a source said. "It could be busy next week."

Existing du Pont bonds trade off

The news that du Pont was bringing a big new deal to market Tuesday helped to push its existing bonds lower, as traders feared that their bonds would be less attractive compared with the new issue.

A market source saw du Pont's 6% notes due 2018 as having widened out to the 410 bps level, about a 60 bps deterioration.

New Shell bonds remain wider than issue

A trader saw Shell International Finance BV's new 6.375% bonds due 2038 still trading at wider levels than where they had priced, though they were in a little bit from Monday's initial trading levels.

The multinational energy giant priced $2.75 billion of the bonds at a spread over comparable Treasuries of 325 bps on Tuesday. Later that session, the bonds were seen to have widened by as much as 10 or 15 bps from that level.

Wednesday saw the bonds narrow a little from those first aftermarket levels, to 335 bps bid, 332 bps offered.

General Dynamics seen firmer

General Dynamics Corp.'s new 5.25% notes due 2014 were flying higher versus the level at which the Fairfax, Va.-based defense contractor priced its $1 billion of new bonds on Monday. Those bonds priced at 365 bps over and stayed there initially.

On Wednesday, the trader said, the new bonds had tightened to 348 bps bid, 345 bps offered.

Cox Communications slips up

Cox Communications Inc.'s new 9.375% notes due 2019 were seen having widened out from their pricing level at 675 bps over; a trader saw the cable-TV operator's bonds at 687 bps bid, 680 bps offered.

New utility bonds a little firmer

The Wisconsin Electric Power Co. 6.25% bonds due 2015 were seen having tightened a little to 420 bps bid, 422 bps offered, in slightly from the 425 bps bid level at which the $250 million of bonds priced.

Fellow utility Oklahoma Gas & Electric Co.'s new 8.25% notes due 2019 traded at 545 bps bid, 540 bps offered. That was in very slightly from the 549 bps level at which the $250 million of those bonds priced on Monday.

HP continues to firm

A trader saw Hewlett Packard Co.'s 6.125% notes due 2014 at 395 bps bid, 385 bps offered. That's somewhat tighter than the 407 bps over level at which the issue had been trading on Monday. It was well in from the 460 bps over level at which the Palo Alto, Calif.-based computer equipment maker had priced its $2 billion of new bonds back on Dec. 2.

Over $55 million of the bonds traded on Wednesday, putting it atop of the most actives list.

Other busy names included Altria Group Inc., Merrill Lynch & Co. and Verizon Communications Inc.

The trader said that generally, "it was very busy," and that "people are trying to get rid of paper [that they hold now] so they can buy the new issues."

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