ConocoPhillips, Duke Realty, Citi, Bank of America price: TransAlta, Citi, plan upcoming issues

By Andrea Heisinger and Paul Deckelman

Omaha, May 5 - Market conditions remained favorable over the weekend, allowing for issues Monday from ConocoPhillips Co., Duke Realty LP, Citigroup Inc. and Bank of America Corp.

It was a typical amount of issues for the beginning of the week, sources said, despite the large amounts from financial names.

In the investment-grade secondary market Monday, advancing issues were about even with decliners, while overall market activity, reflected in dollar volumes, fell by about 15% from Friday's pace.

Spreads in general tightened were little changed as Treasury yields rose or fell only marginally; the yield on the benchmark 10-year note, for instance, increased by 1 basis point to 3.87%.

Conoco brings $1.5 billion

Conoco priced $1.5 billion of senior unsecured notes in three tranches.

The $400 million of 4.4% five-year notes priced at 99.825 to yield 4.439% with a spread of Treasuries plus 130 bps.

The $500 million of 5.2% 10-year notes priced at 99.991 to yield 5.201% with a spread of Treasuries plus 135 bps.

The $600 million of 5.9% 30-year notes priced at 99.622 to yield 5.9% with a spread of Treasuries plus 135 bps.

RBS Greenwich Capital and Citigroup Global Markets Inc. were bookrunners.

Duke upsizes

Duke Realty priced an upsized $325 million of 6.25% five-year senior notes at 99.934 to yield 6.265% with a spread of Treasuries plus 312.5 bps.

There was no price guidance given prior to pricing, a source close to the issue said.

The size was increased from $300 million.

Wachovia Capital Markets LLC was bookrunner.

Citi sells, plans more

Citigroup priced one issue and announced another.

They priced $3 billion of 6.125% 10-year notes at 99.645 to yield 6.173% with a spread of Treasuries plus 230 bps.

Citigroup was bookrunner.

The company also announced an issue of preferred stock, with pricing expected Tuesday, a source said.

Bank of America priced $2.7 billion of floating-rate notes for themselves in two tranches, market sources said.

The issues were each of two-year notes, with one at $1 billion and the other $1.7 billion.

Full terms were not available.

TransAlta to price 10-years

Two other upcoming issues were announced.

Canadian electric company TransAlta Corp. announced an issue of 10-year senior unsecured notes with price talk at Treasuries plus 350 bps.

HSBC Securities Inc. and Citigroup are bookrunners.

Korea Railroad announced a $300 million issue of five-year senior unsecured bonds. The issue is on roadshow through Wednesday.

Citigroup, HSBC and Morgan Stanley & Co. Inc. are running the books.

Financials return to the well

The number of large issues from financial names had a specific purpose Monday, a source said.

"It was just more continuation of the financials needing funding," he said, noting the double hit from Citigroup.

The tone was much the same in the primary market, with the secondary sitting a bit softer, a source said.

"It got a little worse in the market throughout the day," he said. "Other than the financials, there were only a couple of deals. It was fairly typical for a Monday."

The coming week is still predicted to be fairly busy, with issuance about on par with last week's.

Issuance should pick up Tuesday with the success of Monday's issuers, a source said.

Market unchanged to weaker

Traders saw little real movement in some of the new bonds which have come over the past session or two. One said that "in general, things were unchanged to a bit weaker." He characterized Monday as "a very quiet day, with some European markets closed."

He said that the big new Citigroup deal "took the spark and the focus away from anything else that might have been going on."

New financials ease

In the financial sector, he saw Morgan Stanley's re-opened 6.625% notes due 2018, which priced at 240 bps over comparable Treasuries on Friday and then tightened later that session to 235 bps, trading in a 237 bps context by Monday afternoon, noting the bonds had been "higher earlier in the day."

Likewise, Bank of America's recently priced 10-year notes were trading around 185 bps bid, 182 bps offered earlier in the session but finished at 190 bps bid, 185 bps offered - not far from their 190 bps spread at pricing last week - as "they gave a little ground by the end of the day."

The new Lehman Brothers Holdings 7.50% bonds due 2038 which priced Friday at 305 bps over and then tightened to 295 bps, "were a couple [of basis points] weaker at 300 bps bid, 295 bps offered.

However, he did see the new New York Life 4.65% notes due 2013 at 151 bps bid, 146 bps offered, a little improved from Friday's 155 bps pricing spread, although he said that the credit "trades for a while and then it's gone."

Another trader, who watches non-financial names, saw no immediate aftermarket trading in the new Duke Realty or ConocoPhillips bonds which priced Monday.

He saw Comcast Corp.'s 6.40% bonds due 2038 offered at 188 bps versus its 185 bps spread at issue Friday and its 5.70% notes due 2018 unchanged, also at 185 bps.

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