Spectra, MetLife, Citi price; Barclays announces deal; issuers encouraged by better spreads; WaMu gains

By Andrea Heisinger and Paul Deckelman

Omaha, April 7 - Stability carried over the weekend, leading to investment-grade issues from Spectra Energy Capital, LLC, MetLife Global Funding and Citigroup Inc. to kick off the week of deals pricing.

In the investment-grade secondary market Monday, advancing issues led decliners by just a slight margin, while overall market activity, reflected in dollar volumes, fell by about 12% from Friday's pace.

Spreads in general tightened as Treasury yields rose, the yield on the benchmark 10-year note, for instance, moving higher by 7 basis points to 3.54%.

News reports that Washington Mutual Inc. might get a cash infusion of as much as $5 billion from private equity investor TPG Inc. - the former Texas Pacific Group - pushed the problem-plagued Seattle-based thrift institution's cash bonds up solidly and also caused its credit-protection cots to come in as well.

CDS costs for other banks and brokerage names also came in solidly.

Other financial names like Citigroup and Morgan Stanley were also better on the WaMu news, which seemed to be the major business story of the day.

Spectra brings $500 million

Spectra priced $500 million of 6.2% 10-year senior notes at 99.822 to yield 6.224% with a spread of Treasuries plus 265 basis points.

Banc of America Securities LLC, Deutsche Bank Securities Inc. and RBS Greenwich Capital were bookrunners.

Citi adds

Citigroup added $250 million to its $4.5 billion issue of senior notes from Friday, bumping total issuance up to $4.75 billion.

The 5.5% five-year add-on notes priced at 99.312 to yield 5.660% with a spread of Treasuries plus 290 bps.

This compares with the original issue pricing at Treasuries plus 300 bps.

Citigroup Global Markets Inc. was bookrunner.

The original issue of notes was trading around 266 bps at midday Monday, a market source said.

"I wonder who the people are who are buying the reopened notes, with the originals trading that well," he said.

MetLife sells $3 billion

MetLife Global Funding priced a private offering of $3 billion in two parts. The Rule 144A issue consisted of $1 billion in one-year floating-rate notes with a coupon of three-month Libor plus 37.5 bps and $2 billion in five-year notes priced at Treasuries plus 240 bps, a market source said.

The fixed-rate tranche had a "pretty nice spread," a market source said.

Banc of America, Credit Suisse Securities LLC, Deutsche Bank and Morgan Stanley & Co. Inc. were bookrunners.

An issue from Toyota Motor Credit Corp. also priced Monday. The financing arm of the auto company priced $100 million of one-year medium-term floaters at Federal Funds plus 40 bps.

Agent was Wachovia Capital Markets LLC.

Barclays plans preference shares

An upcoming issue of preference shares from Barclays Bank plc was announced, and is expected to price Tuesday, a source close to the deal said.

The non-cumulative callable shares will be priced at par of $25 and are non-callable for five years.

Barclays Capital Inc., Citigroup, Merrill Lynch, Pierce, Fenner & Smith Inc., UBS Investment Bank and Wachovia are bookrunners.

Korean Southern Power also announced it will price an issue of notes after its road show wraps Thursday.

The issue is being talked at $300 million and will price via ABN AMRO, Deutsche Bank and Citigroup.

There's a possibility it could price Friday if the market is doing well, or it could be next week's business, a source close to the deal said.

More brokerages possible

Now that Citigroup got its large deal done successfully, there could be more brokerage names entering the market this week, a source said.

"I think we'll see decent flow,"' he said. "It's not going to be as big as last week."

Friday ended with around $27 billion in new issues, boosted by the $4.5 billion from Citi.

This week will not beat that, another source said.

"I'm working on a couple of deals," he said. "This week could be moderately busy."

The issue from MetLife surprised some people, as the issuing subsidiary doesn't normally do anything of that size.

Better spreads draw issuers

Some factors may have influenced the decision to get into the market this week, and may spur others to do that same.

"Spreads are tighter and people are watching the markets rally," a source said. "Then again, there's not a lot on hand to issue, and this is a week where a lot of issuers aren't ready to go. That's why it probably won't be as busy."

Citigroup is heading into a blackout period, which is likely why it entered the market when it did, a source said.

Last week went out on a strong note, and things were even stronger Monday morning at the open, with indices tightening.

Tuesday and Wednesday should see a bump in issuance.

WaMu, Citi gain

A trader said that WaMu's bonds were "up pretty big, about 3 points" on a dollar-price basis. Other financials, he said were anywhere from 10 to 15 bps tighter, on average.

Among the issues performing better were Citigroup's new 5.50% notes due 2013 which were sold on Friday and which were reopened Monday to add another $250 million. He saw the bonds at 270 bps over Treasury bid, 265 bps offered - well in from the 300 bps spread at which those bonds priced on Friday and from the 290 bps at which the reopener priced Monday.

Meanwhile, Citi's outstanding 6% notes due 2017 were seen having firmed by some 30 bps 20 about the 225 bps level.

Morgan Stanley's 5.05% notes due 2011 came in by about 20 bps to the 225 bps level.

WaMu's own bonds firmed solidly. A market source saw its 4.20% notes due 2010 having firmed to around the 91 level from prior levels at 88, a 3 point pickup. On a spread basis, that translated to a tightening down to around the 990 bps level from late Friday's close around 976 bps.

Other WaMu bonds seen having risen included its 5.95% notes due 2013, up about 2 points at 92 and its 5.125% notes due 2015, up 2½ points to the 82.5 area.

WaMu's New York Stock Exchange-traded shares shot up $2.98, or 29%, to $13.15.

A trader said that the company's debt-protection costs fell solidly, reflecting investor hope that the cash infusion will take place and the nation's largest S&L will be able to straighten itself out.

He saw WaMu's credit-default swap spread narrow by 60 bps to 295 bps bid, 315 bps offered.

WaMu led the way, but in general, he said, "the banks and the brokers were pretty good," their CDS costs anywhere from unchanged to in by 13 bps for the banks, and 8 bps to 15 bps tighter for the brokerage names.

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