Kinder Morgan Energy offers bonds, unseen in trading; Timken advances; coming week busy

By Andrea Heisinger

New York, Sept. 11 - Kinder Morgan Energy Partners LP was about the only entrant into the high-grade primary market on Friday despite a decent tone.

It's likely due to a diminished supply, a market source said, and not actual market conditions.

"We'll see more next week," he said Friday.

Kinder Morgan Energy sold $1 billion of notes in two tranches due 2021 and 2039. It took much of the day for the deal to price, but both tranches sold in line with guidance, a source said.

Secondary levels on the Kinder Morgan notes were not immediately available due to the semi-lateness of pricing, a trader said.

He did report that the previous sale of five-year notes from Timken Co. continued to gain. Bonds from Agilent Technologies, Inc. also held their gains although were unchanged from the previous day's quoted levels.

Spreads were mixed as Treasury yields were both slightly wider and a little tighter by late afternoon, a source said. The five-year note was out 1 basis point from the previous day at 2.29%, while the 30-year bond was 3 bps better at 4.17%.

Kinder Morgan sells two tranches

Houston-based pipeline Kinder Morgan Energy Partners priced $1 billion senior notes in two tranches later in the afternoon.

A $400 million tranche of 5.8% notes due 2021 priced at Treasuries plus 250 bps.

A $600 million tranche of 6.5% 30-year notes priced with a spread of Treasuries plus 240 bps.

Each priced in line with guidance that was in the 250 bps area for the notes due 2021 and in the 240 bps area for the 30-year tranche, a source close to the sale said.

Barclays Capital Inc., Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities ran the books.

Proceeds will be used to repay borrowings under a revolving credit facility and for general corporate purposes.

Coming week seen busy

Volume should be steady for the upcoming week, with sources saying Friday that it should see similar traffic to the past week.

"This was a short week, but we got a lot done," a syndicate source said. "Who knows what we'll see next week, but we have a couple of things that could go Monday or Tuesday."

When asked if the make up of the deals would be similar, with a large amount of industrial names and only a few financials, a market source said he "had no idea."

"It could change between now and Monday," he said. "I'm sure there are a lot of non-financials waiting [to issue]. It's hard to tell."

In the past week, many of the financial issues came from overseas.

"It was a good week," the syndicate source said late in the afternoon. "It was what we were thinking it would be."

Timken bonds continue gains

A new 6% bond due 2014 from bearing, steel and aerospace products company Timken continued to advance in trading over the previous day's levels by late afternoon, a trader said.

The bond sold Wednesday at Treasuries plus 362.5 bps and was quoted 60 bps better at 304 bps bid, 294 bps offered. It was quoted Thursday at 308 bps bid, 302 bps offered.

The new bonds from Kinder Morgan Energy Partners were not yet seen in the secondary due to the semi-late pricing, the trader said.

Agilent bonds hold steady

The two tranches of bonds priced earlier in the week by Agilent Technologies were mostly unchanged from the previous day's levels, although they remained significantly better than pricing.

The 4.45% bond due 2012 priced at 300 bps over Treasuries was outperformed by the 5.5% tranche due 2015 that sold at 320 bps over Treasuries, a trader said.

The 2015 was quoted at 280 bps bid, 270 bps offered, after being seen the previous day at 280 bps bid, 275 bps offered. The notes due 2012 were at 275 bps bid, 265 bps offered, which was the same level as the day before.

Financials top trading

Bonds from Citigroup Inc., MetLife Inc. and American Express Co. were among the day's most heavily traded by mid-afternoon.

Citigroup's 6.375% notes due 2014 were at the top of the most-traded. Citigroup has been watched recently as those in the financial world wait to see if the company can rebuild after receiving a hefty amount of government aid.

MetLife's 6.75% notes due 2016 were popular with investors a day after one of its issuing entities, MetLife Global Funding I, successfully priced a $1 billion offering of three-year notes.

American Express was among the financial names whose stocks slid Friday afternoon. The credit card company's 8.125% notes due 2019 were trading heavily.

Bank, broker CDS mostly unchanged

Credit-default swaps for bank and brokerage names were unchanged to 5 bps tighter across the board by late afternoon, a trader in the sector said.

Genworth, GE Capital gain

Bonds from General Electric Capital Corp., Nabisco and Genworth Global Funding Trust were among those making the biggest moves from the previous week as of late Friday, a source said.

Nabisco's 7.55% bond due 2015 was wider by about 35 bps. This is likely caused by the continued bid for Cadbury by Nabisco's parent company, Kraft Foods Inc. Kraft purchased Nabisco in 2000.

GE Capital's 6% bond due 2012 was also about 35 bps wider.

Genworth Global Funding, a subsidiary of Genworth Financial Inc., saw its 5.25% bond due 2012 tighten about 50 bps from the previous week.

Two days prior, the company saw its stock as among the biggest percentage gainers from the open to close of the market.

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