HP, Baxter, Waste Management, Western Union, Arizona Public sell bonds; new issues see little gain

By Andrea Heisinger

New York, Feb. 23 - The high-grade market saw a healthy dose of new issues Monday, with Hewlett-Packard Co., Western Union Co., Waste Management, Inc., Baxter International Inc. and Arizona Public Service Co. selling mostly small bond offerings.

Issuers tried to shake off bank fears, a source said, and there will be more offerings coming down the pipe in the next few days.

The secondary saw little action from newly priced deals, as many priced too late to start trading. Those that did, including the Baxter notes and a tranche of the Waste Management issue, were seen making little gain.

Treasury yields were seen mostly unchanged from Friday's levels, with the exception of the 30-year benchmark bond.

The yield was seen coming in 6 bps to 3.51%.

HP sells deal late

Hewlett-Packard priced an upsized $2.775 billion of notes in three tranches that launched and priced late in the day. Full terms were not available at press time.

The size of the issue was increased from $2.7 billion, with a tranche of two-year floating-rate notes increased to $275 million from $200 million.

A $1 billion tranche of three-year notes priced to yield Treasuries plus 295 basis points, while a $1.5 billion issue of bonds due 2014 priced flat at Treasuries plus 295 bps.

The $275 million of two-year floaters priced at a coupon of three-month Libor plus 175 bps.

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

The computer company is based in Palo Alto, Calif.

Western Union raises $500 million

Money transfer company Western Union sold $500 million 6.5% five-year notes at 99.66 to yield 6.581%, or Treasuries plus 475 bps.

The spread was at the tight end of price talk of 475 bps to 487.5 bps, a source close to the deal said.

The Englewood, Colo., company plans to use the proceeds to repay a portion of debt outstanding under a term loan facility.

Banc of America and Wachovia Capital Markets ran the books.

Waste Management sells two tranches

Waste Management sold $800 million in two tranches of six- and 10-year notes.

The $350 million of 6.375% six-year notes priced at 99.65 to yield 6.445%, or Treasuries plus 462.5 bps.

The $450 million of 7.375% 10-year notes priced at 99.882 to yield 7.391%, or Treasuries plus 462.5 bps.

Both tranches priced in line with talk that was in the 462.5 bps area, a market source said.

The Houston waste services company is using proceeds to repay securities at maturity.

Barclays Capital Inc., Credit Suisse Securities Inc., Deutsche Bank Securities and RBS Greenwich Capital were bookrunners.

Baxter sells small deal

Baxter International sold $350 million of 4% five-year senior notes at 99.716 to yield 4.063%, or Treasuries plus 222 bps. Baxter sold the bonds to repay debt.

This was in line with price talk, which was also Treasuries plus 222 bps, a market source said.

Deutsche Bank Securities and UBS Investment Bank ran the books.

The issuer is a Deerfield, Ill.-based health care products company.

Arizona utility prices $500 million

Electric company Arizona Public Service priced $500 million 8.75% 10-year notes at 99.945 to yield 8.758%, or Treasuries plus 595 bps.

Barclays Capital, BNY Capital Markets and Credit Suisse were bookrunners for the deal that will be used to repay outstanding short-term debt.

Busy day of small deals

There were a handful of new deals priced Monday, although only one of them cracked the $1 billion mark.

This trend is likely to continue for the remainder of the week, a syndicate source said.

He said it was difficult to tell if the market tone had changed much since Friday when fears of bank woes left the market mostly bare.

Issuance is likely to slow, and will not include anything like the massive $16 billion deal from Roche priced the previous week.

"We won't see anything compared to last week," he said. It will be "relatively busy," he added.

A syndicate source said they have a couple more issues on the calendar to run the books on, including some that are benchmark size.

"I think everyone's ready for a breather," he said.

Baxter tightens slightly

The new 4% bond due 2014 from Baxter International was seen about 10 bps tighter in the secondary a short while after pricing Monday afternoon, a trader said.

The notes were seen at 215 bps bid, 210 bps offered, in moderately from the Treasuries plus 222 bps price.

Waste Management 10-year unchanged

The new 7.375% bond due 2019 from Waste Management was seen moving in very slightly right after being priced, a trader said.

The bond priced at 462.5 bps and was trading at 460 bps bid with no offer, he said.

Other issues priced too late to get secondary levels, or in the case of the Arizona Public Service deal, were not seen trading.

Roche holds gains, others discounted

The recent six-tranche issue from Roche remained above water Monday, a market source said. The fixed-rate tranches of the issue were seen making swift gains in trading but then hitting a plateau or losing some of the gains a couple of days later.

Other issues were seen trading at discounts to issue price, the source said.

Recent Altria bond top traded

A tranche of the recent issue from Altria Group Inc. was seen as the top traded of the day as of early afternoon Monday.

The 10.2% bond due 2039 had the highest volume.

A floating-rate note due 2009 from Comcast Corp. had the second-highest trading volume.

Bank CDS mostly unchanged

Credit-default swaps for bank names were mostly unchanged to 5 bps wider, a trader said late Monday.

Citigroup Inc.'s was seen 5 bps wider from Friday's level, he said. Bank of America Corp. and Morgan Stanley were also seen 5 bps wider.

JPMorgan Chase & Co. and Goldman Sachs Group Inc. bonds were unchanged, he said.

Merrill Lynch was the poor performer of the day, moving out 20 bps, the trader said.

Financials monopolize big movers

Bank and financial names were seen high on the list of the day's big movers as of late Monday afternoon.

One exception was Deutsche Telekom International Finance, which saw its 5.375% bond due 2011 tighten more than 60 bps from the previous week.

US Bank NA, Goldman Sachs Group and Wells Fargo each were seen with bonds tightening more than 50 bps.

Those bonds widening the most were nearly all bank and financials.

Wells Fargo's 5.25% bond due 2012 was more than 60 bps wider, with others widening upwards of 40 bps or 50 bps.

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