JPMorgan, Kommunalbanken price during session; AT&T, Wal-Mart ease; Morgan Stanley widens

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 15 – JPMorgan Chase & Co. and Kommunalbanken AS sold notes on Wednesday during a rough session for the broader markets.

With weaker economic data out of the United States and China fueling global growth concerns, the yield on the 10-year Treasury fell to as low as 1.86% on Wednesday.

Amid the softer backdrop, JPMorgan Chase priced a $2 billion offering of senior notes in line with price talk, which had not budged from initial guidance.

The new deal from JPMorgan came on the heels of its third-quarter earnings release on Tuesday, with the bank reporting a lower-than-expected net profit of $5.6 billion, or $1.36 per share, compared to a loss of $380 million during the previous year.

In other primary action, Kommunalbanken also sold its new $1 billion of five-year notes in line with price talk.

With earnings season underway and continued market volatility, activity in the primary market has been measured this week.

Only three new deals have priced in the investment-grade bond market, bringing the week’s total supply to $4 billion.

“We should see some more offerings from financial names,” one market source said.

Investment-grade bonds headed out mostly weaker on the day, sources said.

The Markit CDX North American Investment Grade series 23 index eased 1 basis point to a spread of 74 bps.

AT&T Inc.’s 4.8% bonds due 2044 softened 1 bp over the session, a source said.

The 3.3% notes due 2024 that Wal-Mart Stores Inc. reopened in the previous week traded 2 bps wider, according to a market source.

In other secondary trading, Morgan Stanley & Co. Inc.’s 3.875% notes due 2024 were quoted more than 10 bps wider from Friday, a source said.

JPMorgan brings $1 billion

JPMorgan Chase priced $2 billion of 2.2% five-year senior notes (A3/A/A+) at Treasuries plus 100 bps, an informed source said on Wednesday.

The notes sold in line with talk.

Pricing was at 99.788 to yield 2.245%.

J.P. Morgan Securities LLC was the bookrunner.

The financial services company is based in New York City.

Kommunalbanken prices

Kommunalbanken sold a $1 billion offering of 1.5% five-year notes (Aaa/AAA/) at 99.904 to yield mid-swaps plus 5 bps on Wednesday, a market source said.

Pricing was in line with talk.

The sale was done under Rule 144A and Regulation S.

The bookrunners were Barclays, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Mizuho Securities.

The government-funded lender to municipalities is based in Oslo.

AT&T bonds ease

AT&T’s 4.8% notes due 2044 (A3/A-/A) traded 1 bp weaker on the day at 167 bps offered, a market source said.

AT&T sold $2 billion of the 30-year notes on June 3 at a spread of Treasuries plus 140 bps.

The telecommunications company is based in Dallas.

Wal-Mart weaker

Wal-Mart’s 3.3% notes due 2024 (Aa2/AA/AA) eased 2 bps to 71 bps offered, a source said.

The company priced a $500 million add-on to the existing notes on Oct. 7 at a spread of Treasuries plus 73 bps.

Wal-Mart originally sold $1 billion of the notes at Treasuries plus 73 bps on April 15.

The discount retailer is based in Bentonville, Ark.

Morgan Stanley widens

Morgan Stanley’s 3.875% notes due 2024 (Baa2/A-/A-) headed out weaker at 146 bps offered on Wednesday, a market source said.

The notes were quoted on Friday at 135 bps offered.

Morgan Stanley sold $3 billion of the notes at Treasuries plus 130 bps on April 23.

The financial services company is based in New York City.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices were higher on Wednesday, according to a market source.

Bank of America Corp.’s CDS costs rose 3 bps to 77 bps bid, 82 bps offered. Citigroup Inc.’s CDS costs were 3 bps wider at 76 bps bid, 81 bps offered. JPMorgan Chase & Co.’s CDS costs were 1 bp higher at 61 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs rose 2 bps to 50 bps bid, 55 bps offered.

Merrill Lynch’s CDS costs were 3 bps higher at 81 bps bid, 85 bps offered. Morgan Stanley’s CDS costs ended 3 bps higher at 88 bps bid, 93 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 5 bps higher at 91 bps bid, 96 bps offered.

Stephanie N. Rotondo contributed to this review

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