Questar Market Resources, Westpac Banking sell bonds; supply low for week; Questar tightens

By Andrea Heisinger

New York, Aug. 24 - Questar Market Resources, Inc. and Westpac Banking Corp. priced investment-grade bonds Monday in an otherwise timid start to the week versus previous weeks in which multiple new issues came to market.

There were also sales of Internotes from Dow Chemical Co. and HSBC Finance Corp.

Questar's $300 million issue of 6.8% bond due 2020 was priced by early afternoon at 330 basis points over Treasuries. There was then a lull before Australia's Westpac sold its $1.5 billion of 4.2% bonds due 2015 at Treasuries plus 175 bps.

The Questar bond did well once freed for trading, a secondary source said, quoting it at 15 to 30 bps better. The Westpac bond was not seen in trading due to its late pricing, a trader in the financial sector said.

A recent bond from American Express Credit Co. was at the top of trading, and had also tightened further from its price, a trader said, crediting it to the company's outlook upgrade by an analyst.

Corporate spreads were wider than the previous day's as Treasury yields tightened. The five-year note was 9 bps tighter to yield 2.47%, with the 30-year bond moving in the same amount to yield 4.26%.

Questar unit sells $300 million

Questar Corp. subsidiary Questar Market Resources priced $300 million 6.8% senior notes due 2020 at Treasuries plus 330 bps.

The deal came in line with price talk of the mid-to-low 300 bps area, a source close to the deal said.

Active bookrunners were Bank of America Merrill Lynch and J.P. Morgan Securities Inc. Wells Fargo Securities was a passive bookrunner.

Part of the proceeds will be used to buy additional leasehold interests in core operating areas under a purchase agreement, with the remainder going to reduce debt under a revolving credit facility.

The natural gas company is based in Salt Lake City.

Issuance to remain slow

Two market sources agreed late Monday that issuance will not reach full throttle in the remainder of this week.

Tuesday is likely to look "very similar to today" in terms of the number of deals, a market source said.

"There's not a great deal of supply," he said. "I don't see that changing much tomorrow, even though we have a decent [market] tone."

Another source called the start to the week "boring," with the second source emphasizing this, saying it was "very dull, very boring."

The second market source said his desk had no deals on the burner until Wednesday. The first source said he was seeing "maybe something for tomorrow, but nothing exciting."

Many issuers are holding out until after Labor Day.

Australia's Westpac offers notes

Westpac Banking offered $1.5 billion 4.2% senior notes due 2015 at Treasuries plus 175 bps, a source away from the sale said.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. ran the books.

Proceeds will be used for general corporate purposes.

The banking and financial services company is based in Sydney, Australia.

Dow, HSBC sell Internotes

Dow Chemical sold $84.39 million of senior unsecured Internotes in three tranches, according to an FWP filing with the Securities and Exchange Commission.

A $30.18 million tranche of 5.8% five-year notes priced at par, as did a $14.46 million tranche of 6.65% seven-year notes.

The third tranche was $39.75 million in 7.45% 10-year notes priced at par.

Lead agents were Bank of America Merrill Lynch and InCapital LLC. The diversified chemical company is based in Midland, Mich.

HSBC Finance priced $76.413 million of senior unsecured Internotes in two tranches, according to a 424B2 filing with the SEC.

The sale consisted of a $57.51 million tranche of 4% three-year notes and an $18.90 million tranche of 4.5% five-year notes.

Lead agents were Bank of America Merrill Lynch, HSBC Securities and InCapital LLC.

The financing arm of financial services company HSBC is based in Mettawa, Ill.

Questar bond improves

A new 6.8% bond due 2020 from Questar Market Resources was about 15 to 30 bps better soon after pricing, a trader said. The bond sold early at 330 bps over Treasuries and was quoted at 315 bps bid, 298 bps offered.

Yum! bonds lose ground

Two new bonds from Yum! Brands, Inc., priced late the previous week, lost some of their gains, a trader said.

Both tranches were sold at 187.5 bps over Treasuries.

The 4.25% bond due 2015 was at 169 bps bid, 161 bps offered. This was similar to the level of 165 bps bid, 160 bps offered quoted Friday.

A 5.3% bond due 2019 was in worse shape, slipping almost back to where it priced. It was quoted at 185 bps bid, 170 bps offered, the trader said. This was somewhat of a backtracking from the 180 bps bid, 177 bps offered level from Friday.

News America tranche widens

One of the two tranches of bonds sold recently by News America Inc. was significantly wider than its levels at the end of the previous week, a trader said.

The 6.9% bond due 2039 was sold at Treasuries plus 265 bps. It was quoted at 243 bps bid, 235 bps offered late Monday, remaining tighter than its pricing level. It gave up previous gains, however, as it was quoted Friday at 232 bps bid, 228 bps offered.

There was no new quote available for the 5.65% tranche of bonds due 2020, the trader said.

New AmEx Credit tops trading, tightens

A new 5.125% bond from American Express Credit Co. was at the top of trading volume by early Monday afternoon, a trader said.

The bond due 2014 was sold Aug. 20 and was about 10 bps better late Friday and about 25 to 35 bps better by late Monday, a second trader said. He quoted it at 250 bps bid, 240 bps offered.

The interest in the bond was due to an upgrade of credit card company outlooks by an analyst at Barclays.

An outstanding 5.875% bond due 2013 from AmEx Credit was one of the day's big movers by late in the day, a source said. The bond was about 25 bps improved from a week ago.

Several other financial bonds were also trading heavily, including outstanding issues from Wachovia Capital Trust III, General Electric Capital Corp. and three notes from Citigroup Inc.

Financial bonds move out

Some outstanding bonds from defunct or absorbed financial names were among the day's biggest movers from a week ago, according to their spread quotes, a source said.

A 6.05% bond due 2012 from Merrill Lynch & Co. was more than 60 bps worse than the previous week. A 6.4% bond due 2017 from Bear Stearns Cos. was also out, at more than 35 bps wider.

A 5.75% bond due 2017 from Wachovia Corp., which was acquired by Wells Fargo & Co., was about 25 bps worse than a week ago.

Bank, broker CDS unchanged

A trader said late Monday that credit-default swaps for bank and brokerage names were unchanged from the previous day. They had also been unchanged on Friday.

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