Thomson Reuters, ANZ price debt as concessions, holidays end rally; telecom, bank notes widen

By Andrea Heisinger and Cristal Cody

New York, Sept. 28 - There were two low-key corporate bond sales in the high-grade market on Wednesday as issuers backed off from a brief rally the previous day.

Thomson Reuters Corp. and ANZ Banking Group Ltd. each quickly priced small deals.

Thomson Reuters priced $350 million of 10-year notes while ANZ reopened its 3.25% paper due 2016 to add $300 million.

There was nothing particularly wrong with the market tone for the day, but a few factors may have caused some potential issuers to back off.

"The market was not the most conducive to new deals today," a source said. "The Thomson notes backed up 5 bps and new issue concessions are still 30 to 35 [points]."

Other factors are the start to the two-day Rosh Hashanah holiday and the upcoming quarter end, which means some companies are going to be holding off from pricing debt.

"We had a nice run but I think it's going to be quiet," a market source said of the remainder of the week.

Corporate bonds traded wider on the day, with financial paper 5 basis points to 10 bps wider, a trader said.

Bank of America Corp.'s 5% notes due 2021 widened 10 bps to 445 bps bid, 435 bps offered on Wednesday.

The Markit CDX Series 17 North American high-grade index eased 5 bps to a spread of 141 bps.

"Most of the stuff across the board was unchanged all day and then [early afternoon] everything started moving wider," a trader said.

Time Warner Cable Inc.'s new long bonds traded 10 bps wider on the day, a trader said.

XL Group Ltd.'s new notes widened more than 10 bps in trading on Wednesday.

Also in the secondary market, the new bonds from McDonald's Corp. traded flat and Bemis Co., Inc.'s notes edged tighter.

American Airlines, Inc.'s pass-through trust certificates traded slightly higher than their issue price on Wednesday, a trader said.

Overall trading volume fell 5% to about $12 billion.

Treasuries ended flat to lower on Wednesday despite strong demand for the government's $35 billion auction of five-year notes.

The five-year Treasury note yield ended unchanged at 0.94%. The 10-year note yield rose 1 basis point to 1.98%. The 30-year bond yield was flat at 3.07%.

Thomson Reuters' 10-year

Thomson Reuters sold $350 million of 3.95% 10-year paper (Baa1/A-/A-) to yield Treasuries plus 200 bps, a market source said.

Bookrunners were Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds will be used to repay borrowings under a commercial paper program used to finance repayment of C$600 million of 5.25% notes at maturity in July.

The media and information company is based in New York City.

ANZ reopens debt

ANZ Banking Group reopened its 3.25% notes due 2016 to add $300 million, a source close to the trade said.

"It didn't take long," the source said of how the deal was open and shut.

The notes (Aa2/AA) were priced at Treasuries plus 187 bps.

Total issuance is $1.3 billion including $1 billion priced on February 22 at 120 bps over Treasuries.

Bookrunner was Citigroup Global Markets Inc.

The financial services company is based in Melbourne, Australia.

XL notes widen

XL Group's new $400 million of 5.75% 10-year senior notes widened in the secondary market to 387 bps bid, 382 bps offered, a trader said.

The bonds (Baa2/BBB+/BBB) had priced at a spread of Treasuries plus 375.6 bps.

Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were bookrunners.

The insurance and reinsurance company is based in Dublin, Ireland.

Time Warner widens

Time Warner Cable's 5.5% bonds due 2041 traded 10 bps wider to 270 bps bid, 260 bps offered on Wednesday, a trader said.

The company sold $1.25 billion of the notes (Baa2/BBB/BBB) on Sept. 7 at 232 bps over Treasuries.

The entertainment company is based in New York City.

McDonald's unchanged

McDonald's 2.625% notes due 2022 (A2/A/A) sold the previous day traded flat at 78 bps bid, 75.5 bps offered, a trader said Wednesday.

McDonald's sold $500 million of the notes at 78 bps over Treasuries on Tuesday. The notes had firmed late Tuesday afternoon to 75 bps bid, 73 bps offered.

The fast food chain is based in Oak Brook, Ill.

Bemis stronger

The 4.5% 10-year senior notes (Baa1/BBB) that Bemis sold a day earlier stayed firmer in trading, a source said late Wednesday.

The company sold $400 million of the notes to yield Treasuries plus 258 bps on Tuesday. The notes tightened in trading to 251 bps bid, 246 bps offered that day and were quoted on Wednesday at 250 bps bid, 245 bps offered.

The diversified packaging company is based in Neenah, Wis.

American Airlines rises

American Airlines' 8.625% 10-year class A pass-through trust certificates traded at 100.25 bid, 100.50 offered on Wednesday, a trader said.

The company priced $725.694 million of the series 2011-2 certificates (Baa3/A-) at par to yield 8.625% on Tuesday.

The certificates have a final expected distribution date of Oct. 15, 2021, and a final legal distribution date of April 15, 2023.

The commercial airline is based in Fort Worth, Texas.

CDS cost rise

Bank and brokerage credit default swaps costs rose indicated lessened investor confidence in the financial sector, a source said.

Citi's CDS costs were 10 bps higher at 275 bps bid, 285 bps offered. Wells Fargo's CDS costs rose 7 bps to 145 bps bid, 150 bps offered.

On the brokerage side, Goldman Sachs' CDS costs moved 10 bps higher to 290 bps bid, 300 bps offered. Morgan Stanley's CDS costs closed 10 bps higher at 435 bps bid, 445 bps offered.

Merrill Lynch's CDS costs rose 10 bps to 435 bps bid, 455 bps offered.

Paul Deckelman contributed to this review

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