Ameren leads light action with two note offerings totaling $637 million; coming week seen busy

By Paul Deckelman and Sheri Kasprzak

New York, April 4 - Capping off the week, primary action dwindled even as Ameren Corp. announcing the pricing of two notes for a total of $637 million.

Overall activity remained fairly quiet, market insiders told Prospect News.

One sell-side source said the lull is typical of a Friday.

"It's normally like this," he said. "I don't think it's an indication of any trend at all."

When asked about upcoming offerings, the source said he had seen several things for the coming week, but could not comment at this time.

"We're really not supposed to talk about upcoming deals," he said. "I will say that things look pretty active next week."

Another sell-sider said he also expects an active week.

"It's slow today, but that's pretty normal," he noted. "Next week is looking busy already."

In the investment-grade secondary market Friday, advancing issues led decliners by an almost two-to-one ratio, while overall market activity, reflected in dollar volumes, fell by about 17% from Thursday's pace.

Spreads in general widened, as Treasury yields declined, the yield on the benchmark 10-year note, for instance, coming in by 10 basis points to 3.47%

For yet another session, there was brisk activity in the new bonds of Verizon Communications, Oracle Corp. and Energy Transfer Partners, as well as John Deere Capital.

Citigroup's existing debt was also busily traded, against the backdrop of the banking giant's gigantic new five-year issue.

And debt-protection costs for holders of major bank and brokerage paper were seen continuing to mostly tighten, a reflection of a continued restoration of investor confidence in the recently hard-hit sector.

Ameren prices two deals

Heading up the light activity Friday were two deals from Ameren Corp. The utility sold $337 million in senior secured notes and its subsidiary, Ameren Energy Generating Co., sold $300 million in senior notes, both in private sales.

The senior secured notes have a 6.25% coupon and are due 2018. The notes were sold under Rule 144A.

Proceeds will repay $334 million in outstanding debt, according to a statement released by the company Friday afternoon.

Also, the company's subsidiary Ameren Energy sold $300 million in senior notes.

Those 7% notes are due 2018 and the sale is set to close April 9, the company's statement said. The notes were also sold under Rule 144A.

The stock climbed by 6 cents on Friday to end the day at $45.09, but lost 9 cents in after-hours trading (NYSE: AEE).

Proceeds will be used to repay $298 million in outstanding short-term debt and to provide for other general corporate needs.

St. Louis-based Ameren provides electric and natural gas to customers in Missouri and Illinois.

Verizon, Oracle tighten

Traders saw continued busy activity in the new bonds of Verizon and Oracle, both of which had priced three-tranche mega-deals earlier in the week - $5 billion for Oracle on Wednesday and $4 billion for Verizon on Tuesday.

A market source saw the new Verizon 6.90% bonds due 2037, which priced at 260 bps over comparable Treasuries, narrowing to 224 bps, well in from the 240 bps level at which they had traded on Thursday. Its 5.25% notes due 2013, which had priced at 270 bps over and then traded at 253 bps on Thursday, got as good as 196 bps over in Friday's dealings.

Oracle's new paper also continued to come in. Its 6.50% notes due 2038, which on Thursday had traded at 203 bps over versus 212 bps at Wednesday's pricing, continued to narrow, to close at 187 bps over. The company's 4.95% notes due 2013, which had priced at 222 bps over and then came in to a bid level at 215 bps over on Thursday, improved further to 180 bps above Treasuries. And its new 5.75% notes due 2018 traded at a bid level of 172 bps over, in smartly from 205 bps on Thursday and from a 215 bps spread at Wednesday's pricing.

Among other recently priced credits, Energy Transfer Partners' 7.5% bonds due 2038, which had priced at 330 bps over on Tuesday, were actively traded on Friday at 292 bps over, in from their 305 bps level the previous session, while its 6.7% notes due 2018 narrowed to 270 bps, in from 278 bps Thursday and from 325 bps at the pricing.

John Deere Capital's 5.35% notes due 2018, which had priced at 198 bps last Monday, had improved to 154 bps over by Friday afternoon.

Traders have contended that many of the recent new deals probably priced too cheaply to begin with in order to get the offerings done, leading to dramatic improvements in the bonds' prices once they hit the secondary arena.

Citigroup's existing bonds were trading actively against the backdrop of the company's new five-year notes, which came too late in the day for any aftermarket activity on their own part. Its 6.875% notes due 2038 were among the most heavily traded high-grade bonds today, firming about 2 or 3 bps to the 234 bps level.

In the credit-default swap spread market, a trader said that "spreads came in a bit" Friday, with debt-protection costs for bank paper anywhere from 10 bps tighter for Washington Mutual to 5 bps wider for Citigroup. He saw brokerage paper, such as Lehman Brothers and Bear Stearns, about "5 bps tighter across the board," with Bear finishing at 120 bps bid, 130 bps offered and Lehman at 195 bpd bid, 205 bps offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.