Bank of America, Toyota unit sell floaters; bank notes firm; Family Dollar widens in trading

By Andrea Heisinger and Cristal Cody

New York, Jan. 26 - The investment-grade bond market was virtually empty until later on Wednesday when Bank of America Corp. sold bonds while Toyota Motor Credit Corp. tapped the primary earlier in the day.

The major factor keeping companies out of the market was the Federal Reserve Federal Open Market Committee meeting. The Fed kept the short-term benchmark interest rate steady and also unanimously voted to continue its plan to buy government bonds.

A market source also said that there was "hangover" from the previous night's State of the Union Address.

"Nothing was really planned for today," he said. "We were expecting [the market to be] quiet."

One somewhat surprising deal came from Bank of America. The financial priced $1.5 billion of three-year floating-rate notes by late afternoon.

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

There could be a deal or two in the market on Thursday, but "nothing too major," the source said.

Another source away from the Bank of America sale said he was surprised to see it in the market, but that the bank priced the bonds after the Fed announcement.

"They haven't done anything since earnings [were announced] so not too surprising," the source said.

Overall investment-grade Trace volume was flat at about $15.5 billion, a market source said.

In the secondary market, Bank of New York Mellon Corp.'s and UBS AG, Stamford branch's new deals firmed, traders said.

Both bonds sold well, a source said Wednesday.

"We still see quite a few people willing to buy financial names," a trader said.

In other secondary activity, Family Dollar Stores, Inc.'s 5% 10-year senior notes priced the previous day widened 6 basis points on the bid side, a trader said.

The Markit CDX Series 14 North American investment-grade index was flat on Wednesday at a spread of 83 bps, a market source said.

Government bonds erased the previous day's gains on Wednesday, sending yields up as the market digested the State of the Union address and the Federal Reserve's stance to continue the $600 billion bond buyback program.

The benchmark 10-year Treasury note yield rose to 3.42% from 3.33%. The 30-year bond yield climbed 10 basis points to 4.59%.

The Dow Jones Industrial Average rose to above 12,000 earlier in the day, which also hurt Treasury sales.

BofA's $1.5 billion deal

Bank of America sold $1.5 billion of three-year floating-rate notes (A2/A/A+) late in the day at par to yield Libor plus 142 bps, according to a syndicate source away from the deal.

The notes priced tighter than initial guidance in the Libor plus 150 bps area.

Bank of America Merrill Lynch was bookrunner.

The bank and financial services company is based in Charlotte, N.C.

Toyota funding arm floaters

Toyota Motor Credit sold $100 million of one-year floating-rate medium-term notes (Aa2/AA) at par to yield one-month Libor plus 5 bps, according to an FWP with the Securities and Exchange Commission.

Daiwa Capital Markets America Inc. was agent.

The U.S. financing arm of the auto maker is based in Torrance, Calif.

Bank of NY Mellon tighter

Bank of New York Mellon's new three- and 10-year medium term notes (Aa2/AA-/AA-) sold the previous day narrowed in secondary trading, a source said Wednesday.

The tranche of 1.5% notes due 2014 priced at a spread of 55 bps over Treasuries and firmed 2 bps to 53 bps on the bid side, the source said.

"Don't see that one offered at all."

Bank of New York Mellon also sold 4.15% notes due 2021 at a spread of Treasuries plus 85 bps.

"I see them offered at 80, so it looks like it's done well," the source said.

Late Wednesday, a trader on another desk saw the 10-year notes weaker but still below issue price at 84 bps bid, 83 bps offer.

The financial services company is based in New York City.

UBS Stamford notes firm

UBS AG, Stamford branch's fixed-rate notes offering (Aa3/A+/A+) tightened more than 5 bps in the secondary market, a trader said.

UBS AG, Stamford branch sold $1 billion of 2.25% three-year notes due 2014 priced at a spread of 127 bps over Treasuries.

"They're a little bit tighter, 122 bid," a trader said.

Another trader saw the notes stronger in late afternoon trading at 120 bps bid, 115 bps offer.

The global financial services company is based in Basel and Zurich, Switzerland.

Family Dollar widens

Family Dollar Stores' 5% 10-year senior notes (Baa3/BBB-) due 2021 that priced to yield Treasuries plus 175 bps on Tuesday widened in next-day secondary trading, a trader said.

The notes were quoted in the afternoon at 181 bps bid, 176 bps offer.

The offering was the company's first bond sale.

The discount retailer is based in Charlotte, N.C.

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