Lehman, Morgan Stanley, Comcast, NY Life, Textron, Israel Electric price to cap $28 billion week

By Andrea Heisinger

Omaha, May 2 - An unusually busy Friday saw new issues from Morgan Stanley, Lehman Brothers Holdings Inc., Comcast Corp., New York Life Global Funding, Textron Financial Corp. and Israel Electric Corp.

These issues brought the week's total to more than $28 billion, which exceeded expectations that had been projected between $15 and $20 billion.

Comcast priced $2 billion in two tranches.

The $1 billion of 5.7% 10-year notes priced at 99.976 to yield 5.703% with a spread of Treasuries plus 185 basis points.

The $1 billion of 6.4% 30-year notes priced at 99.786 to yield 6.416% with a spread of Treasuries plus 185 bps.

Both tranches priced tighter than price talk which was 190 to just shy of 200 bps, a source close to the issue said.

An outstanding 10-year from the company was trading at 172 bps Friday while a 30-year was trading at 178 bps.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and UBS Investment Bank were bookrunners.

Lehman, Morgan Stanley bring $2 billion

Lehman Brothers priced $2 billion 7.5% 30-year subordinated notes at 99.279 to yield 7.561% with a spread of Treasuries plus 305 bps.

Lehman Brothers Inc. was bookrunner.

Morgan Stanley reopened its 6.625% 10-year senior notes to add $2 billion.

This brings total issuance to $4.5 billion, including $2.25 billion priced March 27 and $250 million priced April 1.

The reopened notes priced at 102.923 to yield 6.224% with a spread of Treasuries plus 240 bps.

Morgan Stanley & Co. Inc. was bookrunner.

An outstanding 10-year issue from Morgan Stanley was trading at 230 bps Friday.

New York Life sells $1 billion

New York Life priced $1 billion of 4.65% five-year notes at 99.824 to yield 4.69% with a spread of Treasuries plus 155 bps.

Deutsche Bank, Merrill Lynch and Wachovia Capital Securities LLC ran the books.

Textron reopened its 5.4% five-year senior unsecured notes to add $75 million.

Total issuance is now $375 million including $300 million that priced April 23 at Treasuries plus 245 bps.

The reopened notes priced at 99.994 to yield 5.401% with a spread of Treasuries plus 225 bps.

HSBC Securities Inc. was bookrunner.

Israel Electric priced $1 billion in a Rule 144A/Regulation S offering.

The 7.25% 10-year notes priced at 99.831 to yield 7.275% with a spread of Treasuries plus 350 bps.

This was tighter than price talk of 375 bps.

Lehman Brothers and Citigroup were bookrunners.

Hartford Life Global Funding Trust 2008-03 announced terms of its issue Thursday.

The $300 million of two-year medium-term floating-rate notes priced at par to yield three-month Libor plus 75 bps.

Deutsche Bank was agent.

A broad of names, both industrial and financial, issued during the week.

Those totaling more than $1 billion included Bristol-Myers Squibb Co., Bank of America, OeKB, Deutsche Bank Contingent Capital Trust V, The Chubb Corp. and Credit Suisse.

Smaller issuers were more plentiful and included Fifth Third Capital Trust VII, AMB Property LP, KLA-Tencor Corp., Pearson Dollar Finance, KfW, ProLogis, The Dow Chemical Corp., Jackson National Life Insurance Co., Toyota Motor Credit Corp. and HSBC Finance Corp.

A split-rated issue from CenterPoint Energy, Inc. also priced.

Dow 'remarkably successful'

Many of the week's issuers could count their issues successful, and often oversubscribed.

Dow Chemical and ProLogis were two of these.

The issue from Dow Chemical was more than 10 times oversubscribed, said Chris Huntley, spokesman for the company.

"Frankly it was remarkably successful," Huntley said.

The company issued on Thursday, following a Federal Reserve rate cut announcement that buoyed market conditions.

"The timing in these situations is important," he said. "We're in the midst of a troubled credit environment but the financial community believes it's a solid investment and a good quality company."

This was the first dollar-denominated bond issue from the company since 2002.

ProLogis 'closely monitoring'

Thursday's ProLogis issue went well, as evidenced by oversubscriptions, said Jessica Crow, a spokesperson for the company, via e-mail.

"We have been closely monitoring the market and issued yesterday [Thursday] because the market tone was good and there was a clear economic calendar," she said.

Crow added the company went with 10-year notes because it's a term that fits well with the company's schedule of maturities.

Big week expected

The coming week will likely be similar in issuance to this week, sources said.

"What we're hearing here and outside is that next week will feel about the same," a market source said.

"We had a few relatively large deals this week, and the total was more than anyone was anticipating."

Another source said this was a good, fairly active week with good market tone.

"I think the momentum will carry us into next week," he said.

New deals tighten in trading

The secondary market remained relatively quiet Friday apart from traders watching the few new issues.

The Lehman Brothers notes were seen tightening to Treasuries plus 295 bps from 305 bps pricing, a source said.

Morgan Stanley's reopened notes were seen tightening similarly, to Treasuries plus 235 bps from 240 bps pricing.

Both Comcast tranches were seen at Treasuries plus 180 bps after pricing at 185 bps.

"It's a typical quiet Friday," a source said. "Everything is dominated by the news of Bank of America not guaranteeing the Countrywide debt, so that kind of put a damper on things."

The split-rated CenterPoint issue from Thursday was seen tightening to 265/255 bps versus Treasuries plus 282 bps pricing.

Countrywide clobbered

An S&P downgrade of Countrywide Financial's debt from nominally investment grade to junk proved to be a downer for its bonds, although a trader pointed out that bondholders were likely "much more motivated" by the underlying event which triggered that multiple-notch downgrade from BBB+ to BB+: Bank of America's warning that it may not stand behind some categories of the mortgage-lender's debt after it completes its $4 billion purchase of the company.

A trader said that the most active Countrywide issue that he saw was the 6¼% notes due 2016. "That was the one that really got clobbered" on the B of A news and the resulting S&P move. He saw the '16s down 5 points on the session in heavy trading at 83 bid, 86 offered.

At another desk, a market source saw the bonds end at 85 - but called that a 7 point loss versus Thursday's levels. And another source had the bonds 10 points down at 82.

Even Countrywide's bonds coming due in less than three weeks, on May 21 - widely considered to be money-good, despite whatever longer-term problems the company may have - were seen easing, down ½ point at 99 bid, 99.75 offered, a trader said.

Countrywide, another intoned, "definitely took a hit on the news."

In a regulatory filing Wednesday, the banking giant - which emerged as the troubled mortgage originator's rescuer some months ago and which has maintained several times since then that its acquisition of Countrywide is still on track, despite large losses and other problems Countrywide has shown in the interim months - said it was evaluating possible courses of action to deal with Countrywide's debt, among them "the possibility of redeeming, assuming, or guaranteeing some or all of this debt," However, the bank warned that "there is no assurance that any such debt would be redeemed, assumed or guaranteed," adding that no decision has yet been reached.

That could leave the status of as much as $38.1 billion of Countrwide's approximately $97 billion of obligations in doubt, including approximately $17 billion of medium-term notes, $4 billion of convertible debt, $2.2 billion of junior subordinated debt and $1 billion of subordinated debt currently outstanding.

-Paul Deckelman contributed to this report.

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