Duke Energy, WEA Finance, Halyk Bank price; issuance slows despite stable market; Wal-Mart eases

By Andrea Heisinger and Paul Deckelman

Omaha, April 9 - Issuance slowed Wednesday, with just a handful of issuers including Duke Energy Carolinas LLC pricing.

This was no fault of the market's, sources said. Instead, it may be that issuers need time to regroup and that supply has momentarily dwindled.

"There was a Treasury market rally, which helped," a source said. This may be attributed to further talk of recession.

"I really don't know why we're not seeing more [issues]."

In the investment-grade secondary market Wednesday, advancing issues led decliners by a three-to-two ratio, while overall market activity, reflected in dollar volumes, fell by about 1% from Tuesday's pace.

Spreads in general widened, as Treasury yields tightened, the yield on the benchmark 10-year issue, for instance, coming in by 8 basis points to 3.48%

The new Duke Energy Carolinas bonds were seen having firmed by several basis points after the bonds crossed over to the secondary side of the fence.

Meanwhile, Wal-Mart Stores, Inc.'s big new issue, which priced on Tuesday and then tightened up in initial aftermarket dealings, gave back some of those gains in Wednesday's session.

Duke Energy sells $900 million

Duke Energy Carolinas priced $900 million of first and refunding mortgage bonds in two tranches.

The $300 million 5.10% 10-year notes priced at 99.853 to yield 5.119% with a spread of Treasuries plus 165 basis points.

The $600 million 6.05% 30-year notes priced at 99.725 to yield 6.07% with a spread of Treasuries plus 177 bps.

Banc of America Securities LLC, Barclays Capital Inc. and RBS Greenwich Capital were bookrunners.

WEA, Halyk bring deals

Australia's WEA Finance priced $1.1 billion of 10-year notes in a Rule 144A offering, with a spread of Treasuries plus 375 bps.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith were bookrunners.

The issuer is a subsidiary of retail property company Westfield Group, based in Sydney, Australia.

A split-rated issue from HSBK BV also priced in a Rule 144A offering.

The unit of Kazakhstan-based Halyk Bank priced $500 million 9.25% five-year notes at 98.948 to yield 9.5% with a spread of Treasuries plus 692 bps.

The notes are rated Baa3/BB+/BB+.

Bookrunners were J.P. Morgan Securities Inc. and UBS Investment Bank.

An issue from Korean Southern Power is still expected to price this week after its road show ends Thursday, a source close to the deal said.

Issuance slows

The slowdown in new issues is no reflection on market conditions, a source said, despite a slight weakening in the market Wednesday.

"Part of it's [earnings] blackout related and there have been a lot that came in the last couple of weeks," he said. "If a company was going to issue debt, they probably did it in the last week or two."

Tuesday's Wal-Mart Stores Inc. deal performed well, but still didn't encourage much new issuance, as some had hoped it would.

"A lot of things have been performing well, and it's fair to say it should have encouraged more issuance," a source said.

"I don't think there's any specific reason people aren't issuing."

Duke firms in trading

When the new Duke Energy bonds were freed for secondary dealings, a trader saw them tighten up by just a few basis points - in contrast to the sharp tightening seen in some other recent new deals.

He saw the Duke 5.10% notes due 2018 , which priced at 165 bps over comparable Treasuries, come in in the aftermarket to about 163 bps over. The 6.05% notes due 20138, which priced at 177 bps over, were at 175 bps bid, "looking" [for offers].

He said that "they're pricing these deals right - they're not pricing them stupidly cheap, where they're trading up 50 bps." He said that when a deal is priced as it should be, "you get a little couple of basis points pop."

He said "most deals do perform better in the secondary market, both high yield and high grade."

Wal-Mart returns some gains

Wal-Mart's new deal - which had priced Tuesday and then firmed smartly in its initial aftermarket trading - backed off from those highs on Wednesday.

A trader saw the retailing giant's 4.25% notes due 2013, which priced at 160 bps over on Tuesday and then came in as far as 145 bps bid, 147 bps offered, widen back out to 152 bps bid, 147 bps offered on Wednesday.

He also saw the 6.20% notes due 2038, which had priced at 188 bps over and which had then tightened to 171 bps bid, 169 bps offered, widen back out on Wednesday to 185 bps bid, 179 bps offered.

WaMu CDS weaker

Elsewhere, Washington Mutual's credit defaults swap spreads widened for a second straight session from their lows of earlier in the week.

A trader saw them balloon back out by 35 bps to 360 bps bid, 380 bps offered, on top of the 25-bp widening seen on Tuesday - leaving the debt-protection costs about where they had been before the news that the troubled thrift would get a big cash infusion.

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