Moody's, Ingram Micro, Toyota Motor Credit sell bonds on slow day; financials mixed in trading

By Andrea Heisinger and Cristal Cody

New York, Aug. 16 - The week got off to a slow start on Monday with three small deals from Moody's Corp., Ingram Micro Inc. and Toyota Motor Credit Corp. pricing.

Credit ratings agency Moody's priced its first debt offering, an upsized $500 million of 10-year notes. The sale took much of the day to price since there wasn't outstanding debt to use as guidance, a source said.

A similarly sized sale came from information technology company Ingram Micro, which priced $300 million of seven-year notes.

Toyota Motor Credit sold $100 million of one-year floating-rate notes.

The financial sector was mixed in trading, with debt of six years to 10 years seen tighter in the secondary market, a source said.

Overall investment-grade Trace volume shed 16% to come in at less than $10 billion, according to a market source.

The Markit CDX Series 14 North American investment-grade index eased 3 bps to a spread of 111 bps, according to Markit Group Ltd.

Treasuries rallied on Monday and sent the benchmark yield to its lowest level this year on continued economic concerns.

"We're selling gain to overstretch levels, and we would rather see clients get in slightly higher yields, but if stocks were to fall apart and problems in Europe were to resume, yields could crack under 2.50%," said George Goncalves, strategist at Nomura Securities.

The yield on the 10-year note fell to 2.56% from 2.67% on Friday.

The yield on the 30-year bond also dropped, to 3.71% from 3.86%.

Moody's sells first bonds

Moody's sold an upsized $500 million of 5.5% 10-year senior unsecured notes (/BBB+/) late in the day in its first bond offering to yield Treasuries plus 300 bps, a source close to the sale said.

This was in line with talk in the 300 bps area. The size was increased by $100 million from $400 million.

Goldman Sachs & Co. Inc. and J.P. Morgan Securities actively ran the books. Proceeds will be used for general corporate purposes, including debt repayment.

The credit ratings and research agency is based in New York City.

Week starts slow

After a few weeks of steady issues and large deals, Monday was a bit of a step back to the days when issuance was slower and the deals didn't crack $1 billion.

The biggest sale of the day came from Moody's, with its upsized $500 million sale of notes that marked its first sale in the corporate bond market.

"I would say that's what everyone watched today," a market source away from the deal said. "That was about it."

Others were on the phone working on deals that are coming on Tuesday or Wednesday, when issuance is expected to pick up slightly.

"It's not going to be too crazy, but better than today," a source said, referring to issuance volume.

There haven't been any new deals announced, but those that are coming are expected to be from lower-rated companies.

"It's not going to be another Johnson & Johnson," the market source said, referring to the previous week's $1.1 billion sale from the AAA-rated company that got record-low coupons.

Ingram Micro's $300 million

Ingram Micro priced $300 million of 5.25% seven-year senior unsecured notes on Monday to yield 5.25%, an informed source said.

The notes (Baa3/BBB-/BBB-) priced at 99.998 with a spread of Treasuries plus 326.7 basis points. They feature a change-of-control put of 101%.

Bookrunners were Bank of America Merrill Lynch and Morgan Stanley & Co.

Proceeds are being used for general corporate purposes, including refinancing the company's $251 million term loan due 2012.

The global information technology wholesale distributor is based in Santa Ana, Calif.

Toyota offers floaters

Toyota Motor Credit sold $100 million of one-year floating-rate medium-term notes (Aa2/AA) at par to yield three-month Libor plus 8 bps, according to an FWP filing with the Securities and Exchange Commission.

J.P. Morgan Securities was agent for the sale.

The U.S. financing arm of Toyota Financial Services is based in Torrance, Calif.

Financials mixed

Bank paper was mixed in trading, a source said.

Bank of America Corp.'s longer-term debt firmed in the secondary market on Monday, according to a source.

The Charlotte, N.C.-based financial service company's 6.5% notes due 2016 firmed to 271 bps from 281 bps, while the 7.375% notes due 2014 widened 5 bps to 240 bps.

Goldman Sachs Group, Inc.'s longer-termed notes tightened on the day. The 6.15% notes due 2018 firmed 12 bps to 200 bps, the source said.

The financial services company is based in New York City.

Bank, brokerage CDS prices rise

A trader who follows the credit-default swaps market said that the cost of protecting holders of bonds issued by major banks, such as Bank of America, Citigroup and JP Morgan Chase, against a possible event of default inched up to 7 bps higher.

The CDS prices for paper of major investment banking companies, such as Goldman Sachs and Morgan Stanley, was 5 bps to 10 bps higher.

Paul Deckelman contributed to this report.

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