Barrick Gold, Consumers Energy, Agrium price as primary weakens; WaMu wider, Countrywide tighter

By Andrea Heisinger

New York, Sept. 8 - Issuers like Barrick Gold Corp., Consumers Energy Co. and Agrium Inc. felt out the primary market Monday as others waited for the markets to settle down after the weekend's news from Fannie Mae and Freddie Mac.

The Treasury Department's bailout of the two mortgage companies was not a surprise, said market sources, but its positive effect at the open Monday waned later in the day.

In the secondary market, little trading happened in the wake of the news, with volume anticipated to increase Tuesday and Wednesday.

"People wanted to get a day under their belts," a source said. "Tuesday and Wednesday are the big days."

Barrick Gold sells large issue

Units of Canada's Barrick Gold priced $1.25 billion of notes in three tranches Monday, although the company would have liked to do more, a source said.

"They were targeting $1.5 billion," he said.

The source added that Barrick paid "125 basis points cheap to CDS" on the deal - a hefty new issue premium.

The issue was divided into $1.25 billion of five-year notes priced at Treasuries plus 315 bps, $500 million of 10-year notes priced at Treasuries plus 315 bps and $250 million of 30-year notes priced at Treasuries plus 325 bps.

A prospectus filed with the Securities and Exchange Commission Monday morning had the issue at two tranches.

Full terms will be released Tuesday.

Morgan Stanley & Co., Inc. and J.P. Morgan Securities Inc. were bookrunners.

Consumers Energy prices bonds

The subsidiary of CMS Energy Corp. priced $350 million of 6.125% first mortgage bonds due 2019 at 99.93 to yield 6.134%, or Treasuries plus 245 bps.

This was in line with price talk that was in the 245 bps area, a source said.

Citigroup Global Markets Inc., J.P. Morgan, UBS Investment Bank and Wachovia Capital Markets ran the books.

Agrium prices $500 million

Fertilizer company Agrium priced a mid-sized, $500 million issue of 6.75% notes due 2019 Monday, a source said.

The notes priced to yield Treasuries plus 310 bps, which was also where they were talked.

Bookrunners were Merrill Lynch, Pierce, Fenner & Smith Inc. and UBS.

AmEx Credit issues InterNotes

American Express Credit Corp. continued issuing from its InterNotes program Monday, pricing $102.84 million in three tranches.

The issue was made up of $45.45 million of 5.7% three-year notes, $36.07 million of 6.25% five-year notes and $21.315 million of 6.65% seven-year notes.

All are priced at par.

Banc of America Securities LLC and Incapital LLC were lead agents.

Altria plans debt market tap

Tobacco company Altria Group, Inc. plans to access the public debt market in conjunction with its acquisition of smokeless tobacco company UST Inc.

Altria announced the financing plans in a press release Monday, adding that it intends to do this to refinance a portion of its credit facilities.

The company's subsidiary, Philip Morris USA Inc., has agreed to guarantee Altria's debt in order to get higher credit ratings.

Primary market fluctuates

Issuers pricing offerings Monday likely noticed a change in market tone from when they announced an issue in the morning and when the debt priced in the afternoon.

"In the morning, we did see credit rallying," a source said. "There was a fair amount of optimism at the open."

Then, after names like Barrick priced and paid dearly for doing so, the tone was less rosy.

"It definitely ended on a less constructive tone than people had hoped for," a source said. "They were hoping for something like what happened with Bear Stearns."

He was referring to the market upturn after JPMorgan's weekend buyout of the ailing Bear Stearns in a move orchestrated by the government - similar to what happened with Fannie and Freddie Sunday.

The result Monday was credit default swaps being "a touch tighter," a source said, and the rest "basically an equities story."

This outcome is not what companies or investors were hoping for, as many have been waiting to issue since the end of August.

"The trend before Labor Day was one diminished on the investors' part," a source said. "People carried a large calendar and were waiting."

The market tone hasn't supported that calendar, which is turning into more and more of a backlog, sources said.

Those that do need to tap the market have been sitting on the sidelines monitoring pricing.

"The names we have want helpful data points in front of them," a source said.

Many of the deals that have priced in the last couple of weeks have not topped the $1 billion mark, and some were waiting to see what happened when an issuer priced one. Monday's issue from Barrick may offer some encouragement, even though it didn't go as smoothly as the company may have hoped.

"People were hoping for some sort of illustration that September is open for larger deals," a source said.

Consumers Energy's 6.125% notes due 2019 were seen mostly unchanged after pricing Monday afternoon, a secondary source said.

Secondary slow on mortgage news

The secondary market saw little action Monday as many investors and companies looking to enter the primary market sat the day out, a source said.

"It was extremely quiet today with the news that came out," he said.

The reference was to mortgage companies Fannie Mae and Freddie Mac, which saw a government takeover Sunday.

"There was hardly any trading today," the source continued.

The prospects are looking better for Tuesday and Wednesday, with more issuers tapping the primary market.

It's looking like a busy week, a source said, after potential issuers and investors felt out the market conditions following the news that unfolded over the weekend.

Bank CDS get boost

Credit-default swaps for large banks tightened sharply Monday after the Fannie and Freddie bailout news, a trader said.

The CDS were generally 10 bps to 25 bps tighter.

Washington Mutual saw its CDS 20 bps wider on the ouster of its chief executive. The bank's debt protection now costs 24.75% to 27%, up front plus 500 bps annually.

Debt-protection costs for broker names were seen 10 bps tighter to 10 bps wider, the trader said.

Lehman Brothers was 10 bps wider at 315 bps bid, 330 bps offered, with a source calling the investment bank "kind of diseased."

Merrill Lynch was 10 bps tighter at 295 bps bid, 310 bps offered.

Morgan Stanley was also 10 bps tighter at 200 bps bid, 210 bps offered.

Countrywide day's big mover

Countrywide Financial Corp. saw its 6.25% notes due 2011 tighten more than 25 bps on the tails of the bailout of its fellow mortgage lenders Fannie Mae and Freddie Mac.

Most of the names seeing bonds tighten more than 10 bps were financial names.

Among those widening considerably was Petrobras International Finance, with its 5.875% notes due 2018 moving out more than 25 bps.

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