Primary muted to end busy week of issuance; Time Warner Cable volatile on takeover reports

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 22 - The high-grade primary bond market was quiet on Friday, ending one of the most active issuance weeks of the year.

More than $25 billion of high-grade paper was printed during the week, according to Prospect News data, with most of that priced during Monday and Tuesday's sessions.

One market source had hinted there could be some primary action on Friday, but the U.S. investment-grade market was muted during the session.

Looking ahead, around $5 billion of new issuance is expected for the Thanksgiving holiday week.

"That will be Monday and Tuesday," a market source said, adding that he expects the rest of the week to be mostly quiet.

In the secondary market, Time Warner Cable Inc.'s notes swung from one end to the other in trading over the day following reports the company could be the takeover target in a bidding war between Comcast Corp. and Charter Communications Inc., according to market sources.

"It was a very volatile name today," a trader said. "From the lows of the day, it's almost 70 basis points tighter, but it opened 40 [bps] wider and now it's 30 [bps] better. Back to unchanged. Different stories floated out there left and right, so it was very choppy trading."

Time Warner Cable's stock closed up $12.06, or 9.98%, to $132.92 on Friday.

Outside of Time Warner Cable, investment-grade bonds firmed on the day with spreads 2 bps to 3 bps better in general, sources said.

In the secondary market, Western Union Co.'s 3.35% senior notes due 2019 traded about 10 bps tighter from where the issue broke on Tuesday, according to a trader.

Capital One Financial Corp.'s new paper sold at the start of the week tightened about 3 bps in trading.

Time Warner Cable most active

Time Warner Cable's bonds were "far and away the most active" over the session on Friday, a trader said.

The company's 4.125% senior notes due 2021 traded at 205 bps bid, 185 bps offered.

In late September, the notes were quoted at 210 bps bid, 202 bps offered.

Time Warner Cable (Baa2/BBB/BBB) sold $700 million of the notes in 2010 at a spread of 155 bps over Treasuries.

In other trading, Time Warner Cable's 5% senior notes due 2020 headed out at 181 bps bid, 160 bps offered. The notes have tightened since September when the issue traded at 240 bps bid, 232 bps offered. The company sold $1.5 billion of the notes in 2009 at Treasuries plus 188 bps.

The broadband communications company is based in New York City.

Western Union firms

Western Union's 3.35% notes due 2019 traded on Friday at 190 bps bid, 185 bps offered, a trader said.

Western Union sold $250 million of the notes (Baa2/BBB+) with a spread of Treasuries plus 200 bps on Tuesday.

The money movement and payment services company is based in Englewood, Colo.

Capital One Financial better

Capital One Financial's 2.15% notes due 2018 (A3/BBB+/A-) traded better on Friday at 82 bps bid, 77 bps offered, a trader said.

Capital One sold $600 million of the five-year notes with a spread of Treasuries plus 85 bps on Monday.

The financial services company is based in McLean, Va.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices declined, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 85 bps bid, 87 bps offered. Citigroup Inc.'s CDS costs tightened 2 bps to 81 bps bid, 85 bps offered. JPMorgan Chase & Co.'s CDS costs declined 2 bps to 74 bps bid, 76 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 46 bps bid, 50 bps offered.

Merrill Lynch's CDS costs tightened 1 bp to 85 bps bid, 90 bps offered. Morgan Stanley's CDS costs declined 1 bp to 99 bps bid, 103 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 101 bps bid, 105 bps offered.

Paul Deckelman contributed to this review.

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