Suncorp-Metway sells Australian government-backed bonds, EM issues planned; spreads widen

By Andrea Heisinger

New York, April 8 - Suncorp-Metway Ltd. priced high-grade bonds Wednesday following two days in the market, while other potential issuers announced bond offerings.

Two offerings are planned from the emerging markets, namely issues from Telemar Norte Leste SA and OAO Gazprom. Meanwhile, California Water Services Co. announced an offering of first mortgage bonds.

The secondary was understandably quiet with desks emptying and little in the way of new issues trading.

Spreads were generally wider Wednesday as Treasury yields tightened, with longer maturities falling more. The 30-year bond came in 5 basis points to yield 3.66%, while the five-year note dropped 2 bps to yield 1.83%.

Suncorp-Metway sells two tranches

Australian banking, insurance and investment company Suncorp-Metway sold $2.5 billion of floating-rate notes in two tranches guaranteed by Australia's government.

The $1 billion of two-year floaters priced at par to yield three-month Libor plus 125 bps, while the $1.5 billion of three-year bonds priced at par to yield three-month Libor plus 150 bps.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were bookrunners.

The sale for the Brisbane, Australia-based company was announced Monday, with pricing pushed a day later than expected.

There was no trouble getting the deal done, a source close to it said, but investors wanted to look through paperwork having to do with the government guarantee.

"They were unfamiliar with it and wanted to read through documents first," he said.

Issues backed by foreign governments are somewhat different to handle than those that have been guaranteed by the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program, he said.

"There's a different set of rules to follow," the source said. "They are a little different."

The size of Suncorp's offering was held constant at "benchmark" throughout the sale, he said.

Two EM issues set

Deals from Brazil's Telemar Norte Leste and Russia's Gazprom were announced Wednesday with upcoming roadshows.

Telemar's is a benchmark-sized offering of 10-year senior unsecured notes, a market source said.

Banco Bradesco BBI, Banco Itau, Banco Santander, BB Securities and Citigroup Global Markets will act as bookrunners for the Rule 144A and Regulation S offering.

A roadshow for the sale will be from April 13 to April 16.

Gazprom is also beginning a roadshow April 13 for a $2 billion bond issue, a market source said.

Credit Suisse Securities is running the books for the Rule 144A and Regulation S offering.

California Water plans sale

California Water Services is planning a $100 million offering of first mortgage bonds, according to a press release and a 424B5 filing with the Securities and Exchange Commission.

The deal did not appear to have priced by late afternoon, a market source said.

The notes are guaranteed by parent company California Water Services Group, which provides water service through subsidiaries and is based in San Jose, Calif.

Robert W. Baird & Co. is the bookrunner for the sale, with proceeds being used to pay down outstanding short-term borrowings.

Primary flat

A mix of holidays, empty syndicate desks and earnings blackouts left the primary market quiet Wednesday. Much of the action was coming from overseas, with an Australian issuer selling, and two from emerging countries announcing offerings.

"Everyone's pretty much shut down," a source said. "It's gonna be worse tomorrow."

The market did get a bump from another foreign name, he said, with Mexico's Cemex SAB de CV getting help from a group of banks in the form of about $500 million to help cover short-term debt.

"The Cemex news was big today," he said. "It gave us a little boost."

GE Capital most traded

A bond from General Electric Capital Corp. was the most traded early Wednesday afternoon, a market source said.

The 6% notes due 2012 were at the top of trading volume, with another financial, Caterpillar Financial Services Corp., also selling at high volume.

Many financials are releasing earnings in the coming week. Caterpillar Financial parent company Caterpillar Inc. saw its shares fall from Tuesday as Moody's Investors Service warned the heavy equipment maker could lose its triple-A ratings on some of its debt due to economic worries.

A GE Capital bond was also one of the biggest movers of the day, a source said. The company's 5.875% notes due 2012 were about 70 bps tighter than a week ago.

ConAgra bonds continue tightening

The recent issue of five- and 10-year notes from ConAgra Foods, Inc. continued to improve in trading Wednesday, a trader said, two days after pricing.

The 5.875% notes due 2014 priced at Treasuries plus 400 bps and were at 372 bps bid late in the afternoon. This was a gain from Tuesday when they were at 378 bps bid, 375 bps offered.

The 7% issue due 2019 came down considerably more, trading at 370 bps bid. They priced at 412.5 bps over Treasuries and traded Tuesday at 383 bps bid, 375 bps offered.

Bank, broker CDS widen

Bank and broker name credit-default swaps were 5 to 10 bps wider, a trader said late Wednesday. This was a downturn from the previous day when they were unchanged.

MetLife moves big

Insurance company MetLife Inc. did well Wednesday, with its 7.717% bond due 2019 tightening upward of 70 bps, a source said.

Aluminum producer Alcoa Inc. was also seen in the plus column, after announcing first-quarter earnings Tuesday. The company's 6% notes due 2012 were in nearly 60 bps from the previous week's level.

The company announced a quarterly loss - its second in a row.

Another of its bonds, a 6.5% issue due 2011, moved the opposite direction and was more than 25 bps wider.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.