Morgan Stanley, Avista, Dun & Bradstreet, Wilmington Trust issue as week winds down

By Andrea Heisinger and Paul Deckelman

Omaha, March 27 - A handful of deals came into the investment-grade market Thursday, including offerings from Morgan Stanley, Avista Corp., Dun & Bradstreet Corp. and Wilmington Trust Corp.

Morgan Stanley was one of a few financial and brokerage names coming back to the market after the JPMorgan buyout of Bear Stearns.

The investment bank priced $2.25 billion of 6.625% 10-year medium-term senior notes at par to yield 6.625% with a spread of Treasuries plus 290 basis points.

Morgan Stanley & Co. Inc. was agent.

The issue carried about a 20 bps new issue premium, which is good performance for a brokerage name now, a market source said.

In the investment-grade secondary market Thursday, advancing issues lagged behind decliners by a not-quite seven-to-six ratio, while overall market activity, reflected in dollar volumes, fell about 8% from Wednesday's pace.

Spreads in general tightened a bit, as Treasury yields fattened, the yield on the benchmark 10-year note, for instance, rising by 7 bps to 3.53%.

Traders saw newly priced issues such as Newell Rubbermaid Inc., CSX Corp., American Honda Finance Corp. and Hershey Corp. firming smartly from the levels at which they had priced over the past few sessions.

Bonds of telecommunications companies were active, with Verizon Communications seen down and the old Nextel Communications - now part of Sprint Nextel - up.

Avista at tight end

Avista priced $250 million 5.95% 10-year first mortgage bonds at 99.666 to yield 5.992% with a spread of Treasuries plus 250 bps.

The issue went well and priced at the tight end of price talk of 250 to 262.5 bps, a source close to the deal said.

Bank of New York Capital Markets Inc., Goldman Sachs & Co. and UBS Investment Bank were bookrunners.

Wilmington upsizes

Wilmington Trust priced an upsized $200 million of 8.5% 10-year subordinated notes at par to yield 8.5% with a spread of Treasuries plus 495.3 bps.

The amount was increased from $150 million.

Merrill Lynch, Pierce, Fenner & Smith Inc. and J.P. Morgan Securities Inc. were bookrunners.

The issue carried a wide spread, which is to be expected for a smaller financial under recent conditions, a market source said.

"Even though they're a good name, they have some mortgage exposure and are a smaller bank," a source said.

Dun & Bradstreet returns

Dun & Bradstreet priced a $400 million issue originally announced last week and pulled before pricing.

The company priced 6% five-year senior notes at par to yield 6% with a spread of Treasuries plus 346.9 bps. There was no official price talk, a source close to the deal said.

A market source said they heard talk of 350 bps area.

Citigroup Global Markets Inc. and J.P. Morgan were bookrunners.

"They finally got it done," a market source said. "I can guarantee you they had it all sold this time because they weren't going to let that [being pulled] happen again."

Terms were released Thursday for a private offering from International Transmission Co.

According to an 8-K Securities and Exchange Commission filing, the company priced $100 million 5.75% 10-year first mortgage bonds at 99.887 to yield 5.765% with a spread of Treasuries plus 225 bps.

Banc of America Securities LLC was bookrunner.

OAO Gazprom announced Thursday through a preliminary prospectus that it will offer dollar-denominated bonds loan participation notes from a $30 billion program.

Bookrunners for the Rule 144A/Regulation S offering are Citigroup and Morgan Stanley.

New issuance is likely done for the week, although one market source said they wouldn't be surprised to see a deal done Friday.

"There was a pretty solid start today, and there's not a whole lot of reason that anything in the pipeline would have waited until tomorrow," the source said.

"It's possible there could be one deal done tomorrow, though. I wouldn't be surprised."

New issues gain ground

A trader saw that a number of recently priced issues were doing well in secondary dealings - probably because the issues had been cheaply priced to begin with in order to get the issues to market.

He saw American Honda Finance 's 4.625% notes due 2013, which had priced Wednesday at 210 bps over comparable Treasuries, hanging in around the 200 bps over level to which they had moved in Wednesday's aftermarket, although he said that "didn't look like anything was happening" in the bonds on Thursday.

The trader saw Newell Rubbermaid "in significantly" from the levels at which the two-tranche issue priced on Tuesday; its 5.5% notes due 2013 were being offered at 276 bps over, versus their 295 bps spread at the pricing, while its 6.25% notes due 2018, which had priced at 280 bps over, being offered at 252 bps.

He saw Hershey's 5% notes due 2013, which had priced Monday at 250 bps over, offered on Wednesday at 227 bps versus Treasuries, and said that "it looks like they're still in that 230-225 range, in the mid-to-high 220s."

And CSX's new 6.25% notes due 2015 were trading at 330 bps bid, 320 bps offered, in from their spread at Monday's pricing of 337.5 bps.

Telecom a mixed bag

Elsewhere, telecom bonds seemed to attract the attention of investors and were among the most actively traded issues of the day.

On the upside were such issues as the Nextel 7.375% notes due 2015, which came in to a spread of 904 bps. Vodafone Group plc was also seen higher. AT&T Inc. bonds were mixed, and Verizon was on the downside

Financial CDS spreads widen out

A trader meantime said that credit-protection costs for major brokerage names were unchanged to 5 bps wider in general, although Lehman Brothers Holdings - the subject of bearish rumors comparing its situation to that of Bear Stearns - ballooned out to 280 bps bid, 300 bps offered, a 30 bps widening. Lehman vigorously denied it was having problems.

Bank CDS spreads were 5 bps to 10 bps wider, although Washington Mutual was 5 bps tighter at 490 bps bid, 510 bps offered.

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