Investment-grade sees $910 billion new issues year to date, more possible

By Andrea Heisinger and Paul Deckelman

Omaha, Dec. 24 - It was no surprise there were no new issues Monday, but there may be more before year's end.

A market source said although there hasn't been a deal done between Christmas and New Year's in the last five years, that could change this year.

"This year could be different," the source said.

"There could be something Thursday or Friday. It's a long shot, but we didn't think we'd see a new issue Friday either."

He was referring to the offering from transport company Con-way, Inc. with its $425 million issue of notes that was snuck into Friday's market by Goldman Sachs & Co.

So far total issuance for the year sits at about $910 billion, a source said. This beats the 2006 record issuance of $801 billion.

Whether or not there are issues before New Year's, sources agreed that January is set to be a busy month.

"Some issuers, especially financials, want to get things done as early as possible in the year," a market source said.

Secondary mostly quiet

In the investment-grade secondary market on Monday, trading pretty much ground to a halt, participants said, but for a few isolated issues there and there.

"There was less than nothing happening," one high-grade trader said about the overall dearth of activity, and the numbers seemed to bear him out; overall market dollar volume was less than one-10th of even Friday's fairly inert levels. Declining issues were about even with advancers.

Merrill edges tighter

The news that Merrill Lynch stands to get a cash infusion for up to $5.6 billion from the Singapore state investment company Temasek Holdings and another investor, spurred no great rush into the Big Bull's bonds; its 6.4% notes due 2017 were being quoted by a source perhaps 2 basis points tighter at 213 bps, but on not much volume.

However, other financials may have gotten a lift, with Citigroup's 5 5/8% notes due 2012 seen having narrowed about 5 or 6 bps to the 170 bps area, and Goldman Sachs' 6.6% notes due 2012 seen almost 20 bps tighter at 145 bps. On the downside, however, Morgan Stanley's 4¾% notes due 2014 were out about 10 bps on the day to the 195 bps area, a source said.

A trader said that he had meanwhile seen little or no activity in the market for credit-default swaps paper linked to bank or brokerage debt; he quoted Merrill Lynch's debt-protection costs about unchanged at 127 bps bid, 137 bps offered.

Temple-Inland weak

There was downside activity seen in the split-rated bonds of Temple Inland Inc., with some investors apparently choosing to close out their positions in the Austin, Tex.-based packaging, forest products and real estate company's paper ahead of the official completion of its previously announced corporate restructuring.

Its 6 5/8% notes due 2018 were observed down nearly a point at just below par, while its 6 3/8% notes due 2016 were also hovering below par, down slightly more than a point.

There was no fresh news seen out on the company, although it should be noted that Temple-Inland is in the final stage of a previously announced transformation plan that involves retaining its manufacturing operations - corrugated packaging and building products - spinning off its financial services segment to its stockholders, spinning off its real estate segment to its stockholders and selling its strategic timberland. Target date for completion of the plan is Dec. 31.

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