Lehman leads active day with $4 billion notes; OeKB prices $2 billion notes

By Sheri Kasprzak

New York, Jan. 16 - Lehman Brothers Holdings Inc. led a day filled with a few significant note offerings Wednesday when it priced $4 billion in five-year senior medium-term notes with a spread of Treasuries plus 275 basis points.

The 5.625% notes (A1/A+/AA-) are due Jan. 24, 2013 and were priced at 99.544 to yield 5.731%, a term sheet filed Wednesday with the Securities and Exchange Commission said.

The notes are set to settle Jan. 22 and Lehman Brothers is the bookrunner.

In the investment-grade secondary market Wednesday, advancing issues outnumbered decliners by a not-quite seven-to-six ratio. Overall activity, reflected in dollar volume, was down about 14% from Tuesday's levels.

A trader said that there seemed to be a fair amount of activity in the new Lehman bonds, which tightened when they moved into the secondary market. New deals from Target and United Parcel Service remained better, though the recent bond issue from Kraft Foods was softer.

OeKB brings $2 billion

The offering was one of two substantial offerings priced Wednesday. The other major deal came from Oesterreichische Kontrollbank AG, which priced $2 billion in three-year global notes with a re-offer spread of Treasuries plus 50.25 basis points, a term sheet revealed Wednesday.

The 2.875% notes were priced at 99.74.

Goldman Sachs International, J.P. Morgan Securities Ltd. and Nomura International plc are the joint bookrunners for the notes, which are due March 15, 2011.

The notes (Aaa/AAA) are set to close Jan. 24 and are guaranteed by the Republic of Austria.

Goldman Sachs International, J.P. Morgan Securities Ltd. and Nomura International plc are the joint bookrunners.

Textron prices three-year notes

Elsewhere, Textron Financial Corp. priced $100 million in three-year series F notes.

The non-callable notes have a coupon of Libor plus 70 basis points and were priced at par, a term sheet said Wednesday.

The notes are due Jan. 28, 2011 and are set to close on Jan. 18.

Deutsche Bank Securities Inc. is the agent.

Activity picks up

Market insiders agreed Wednesday that pricing action did, indeed, pick up from earlier this week.

"Things are improving," said one market source, who said he has seen some things coming up but wasn't willing to drop the names of any specific offerings.

"Today has been the best day so far this week, but that's generally how it is. Things have been slow lately anyway, but it should get better soon."

Another market source agreed that pricings did pick up on Wednesday.

"I can't comment on what we're working on at this time, but I will tell you that it has gotten busier since the start of the year," he said.

Lehman 'hiccups,' gains

A trader saw the new Lehman Brothers initially "hiccup", along with other financial names, in response to gloomy earnings numbers posted by JP Morgan - the latter company's quarterly net earnings slid 34% from a year earlier, chopped down by subprime-related write-offs. After that, however, the Lehman bonds recovered, tightening to 266 bps over bid, 264 bps over offered, well in from the 275 bps spread at which the bonds had priced.

The new Target bonds, which priced Monday, hung in around the same levels to which they had moved in Tuesday's dealings, or slightly tighter, with the 5.125% notes due 2013, which priced at a spread of 215 bps, seen around 200 bps bid, 195 bps offered.

Target's new 6% notes due 2018, which priced at 235 bps over, had narrowed to 225 bps bid, 222 bps offered. And its new 7% bonds due 2038, which priced at 270 bps over, had tightened to 255 bps bid, 252 bps offered.

Among established issues, Target rival Wal-Mart Stores, Inc.'s 4.50% notes due 2015 were seen having tightened more than 15 bps to about the 80 bps mark.

Another significant gainer was E.I. du Pont de Nemours and Co., whose 5.60% bonds due 2036 narrowed by nearly 20 bps to the 135 bps mark.

In the credit-default swap-spread market, a trader said that Washington Mutual, Inc.'s debt-protection costs narrowed by bps to 370 bps bid, 390 bps - even with the big thrift operator and mortgage originator expected to post a yawning loss of about $1.35 per share on Thursday.

In general, he said, bank and brokerage CDS costs were about 1 bps to 5 bps tighter versus Tuesday's levels.

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