Week's $35 billion issuance tops estimates; Apple bonds 'put away'; IBM trades stronger

By Andrea Heisinger

New York, May 3 - Nearly $35 billion of investment-grade bonds had been priced prior to Friday, with no new deals announced to end the week.

That issuance amount blew the top off estimates of a range between $15 billion and $30 billion, mostly due to the $17 billion mega-deal Tuesday from Apple Inc.

A jobs report for April was released early in the day by the U.S. Department of Labor, showing a drop in unemployment to 7.5%.

"Helped things out today, but not sure what effect it had on our market," one source said.

After the market close, a source said that "it got quiet after like 10 a.m. It was weird - not much trading or anything happening."

Between $20 billion and $25 billion of bonds are expected to be priced in the market in the coming week, with a focus on industrials.

"We have maybe six or seven lined up, with more away from us," one syndicate source said. "A couple will be benchmark [size], and most are industrials."

There could be some financials, but nothing solid from that sector as "those seem to evolve quickly," the syndicate source said.

Also on Friday, Toronto-Dominion Bank gave the terms of its $3 billion sale of two-year floating-rate notes that priced Thursday.

A report from S&P Dow Jones Indices out Friday showed the gains high-grade bonds have made year to date and for the month of April.

Secondary starts strong

The secondary side of the market was seeing a "lot of trading" as of midday, a source said.

The $17 billion of Apple bonds that sold Wednesday remained active.

"That's the centerpiece of the market," a trader said.

The four fixed-rate tranches of the sale made gains between midday and late afternoon.

International Business Machines Corp. saw its $2.25 billion of bonds in tranches due 2016 and 2020 mixed in the secondary.

Just ahead of the market close, a trader commented that it was a "tight market."

The trader was not seeing a lot of flow on Apple bonds and said that they had been put away.

In trading of preferred stock, PNC Financial Services Group Inc.'s new $500 million issue of 4.85% series R fixed-to-floating-rate perpetual preferreds - a deal that priced Thursday - was doing quite well on Friday.

"That thing was amazing," a trader said. "We've breached the 4-handle on regional banks' perpetual stuff."

He said the $1,000-par issue was trading up to 100.375 on Thursday, got as good as 101 bid, 101.5 offered in early Friday trading but was around 101 bid, 101.375 offered at midday.

A market source said the issue closed at 101.25 bid, 101.375 offered.

TD details terms

Toronto-Dominion Bank priced $3 billion of two-year floating-rate senior medium-term notes (Aa1/AA-/AA-) at par to yield Libor plus 18 basis points, according to an FWP filing with the Securities and Exchange Commission.

Price guidance was in the Libor plus 18 bps area.

The bookrunners were Credit Suisse Securities (USA) LLC and TD Securities (USA) LLC.

Proceeds will be added to the bank's general funds and used for general corporate purposes.

TD Bank was last in the U.S. bond market on April 23 when it priced $2.25 billion of bonds in two tranches with five-year maturities.

The financial services and banking company is based in Toronto.

Gamco's preferreds

Gamco Global Gold, Natural Resources & Income Trust by Gabelli priced $100 million of 5% series B cumulative preferred stock (expected rating: A1), the company said in a press release on Friday.

Citigroup Global Markets Inc. and BofA Merrill Lynch were the joint bookrunning managers.

Dividends will be paid quarterly.

The preferreds are redeemable on or after May 7, 2018 at par.

Proceeds will be used to redeem the 6.625% series A cumulative preferred shares, of which there are about $48.89 million outstanding. Any remaining funds will be used to invest in high-quality short-term debt securities and instruments.

Gamco is a Rye, N.Y.-based non-diversified, closed-end management investment company.

IBM moves around

The two notes from IBM's $2.25 billion sale done Thursday were seen moving tighter toward the end of Friday's session.

Early in the day, the $1 billion of 0.45% three-year notes were quoted 1 bp wider at 26 bps, after being seen unchanged after pricing Thursday. The price was Treasuries plus 25 bps.

By late afternoon, they were 2 bps tighter at 23 bps, a trader said.

The $1.25 billion of 1.625% seven-year bonds were seen 5 bps tighter at midday, at 62 bps bid, 64 bps offered. This was an improvement on the 65 bps the paper was quoted at late Thursday.

By afternoon, they were quoted 3 bps tighter at 64 bps bid, according to a trader.

Pricing was at 67 bps over Treasuries.

The information technology and computer company is based in Armonk, N.Y.

Apple's levels

Some of the tranches of Apple's bonds made gains in Friday's session, while others were seen around pricing levels.

At midday, a trader said that since the bonds broke, the 1% notes due 2018 were seen tighter, while the 2.4% 10-year notes were quoted "marginally tighter."

The 3.85% 30-year bonds were seen 1 bp to 2 bps tighter than their Treasuries plus 100 bps price.

By later in the day, the 0.45% three-year notes were seen 4 bps tighter at 16 bps bid, 15 bps offered by another trader, who said levels were from earlier in the day.

The five-year tranche was quoted 5 bps improved from the Treasuries plus 40 bps price at 35 bps bid, 34 bps offered.

The 10-year notes were seen 1 bp better than the 75 bps over Treasuries price at 74 bps bid, 73 bps offered, while the 30-year bonds priced at 100 bps over Treasuries and traded 5 bps tighter at 95 bps bid, 94 bps offered.

The computer and mobile communications device company is based in Cupertino, Calif.

S&P's index figures

A report out from the S&P U.S. Issued Investment-Grade Corporate Bond index on Friday showed a shift in rates as the yield-to-worst moved by 11 bps in April.

High-grade bonds returned a 2.42% gain year to date and a 1.61% gain for April, according to the report.

Stephanie N. Rotondo contributed to this review

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