Plains, W.R. Berkley, Vodafone price ahead of Fed announcement; new issues mixed in trading

By Andrea Heisinger and Cristal Cody

New York, March 13 - The investment-grade primary market was a little more lively on Tuesday than the previous day with sales from Plains All American Pipeline LP/PAA Finance Corp., W.R. Berkley Corp., Vodafone Group plc and Mizuho Corporate Bank Ltd.

There was also a deal of $25-par 30-year bonds from KKR Financial Holdings LLC.

Colony Financial, Inc. priced a $130 million deal of perpetual preferred stock, which was announced on Monday.

One of the largest deals came from Plains All American, totaling $1.25 billion in two parts. The books came in more than five times oversubscribed.

U.K.-based Vodafone sold $1 billion of five-year paper.

A smaller sale came from W.R. Berkley, which priced an upsized $350 million of 10-year notes.

Mizuho Corporate Bank was said to have priced $1.5 billion of five-year paper at 160 basis points over Treasuries, a market source said late in the day. Terms of that Rule 144A, Regulation S deal were not available at press time.

There was a Federal Reserve Federal Open Market Committee meeting that ended with no change to key interest rates and didn't appear to keep anyone from pricing bonds for the day.

"No one was expecting anything different," a source said of the word out of the meeting.

Results of a Federal Reserve Bank stress test on 19 bank holding companies, including JPMorgan Chase & Co. and other top names, were announced two days earlier than expected and right around the market close, a trader said, leaving everyone scrambling. The banks fared well overall.

A source who worked on the Plains All American trade said, "We made sure to come in before the FOMC [meeting]."

Most other deals were also at least launched before any announcement came from the Fed. Investors and issuers alike didn't seem bothered to sell on the day of a Fed meeting.

"Everything did really well - no problems that I'm aware of," a syndicate source said.

The Markit CDX Series 17 North American high-grade index firmed 3 bps to a spread of 92 bps on Tuesday.

"Spreads widened out in the morning but came in a little bit later in the day," a trader said.

Traders were waiting until late afternoon to see how the results of the Federal Reserve's bank stress tests affected bank and financial paper.

"It looks like most of them are going to pass, which is going to be good for spreads," a trader said.

Investment-grade bank and brokerage credit default swaps costs were lower on the day.

Bank of America's CDS costs traded 18 bps lower to 240 bps bid, 248 bps offered. Citi's CDS costs traded 11 bps better at 205 bps bid, 215 bps offered. JP Morgan's CDS costs firmed 4 bps to 96 bps bid, 101 bps offered.

On the brokerage side, Goldman Sachs' CDS costs traded at 230 bps bid, 240 bps offered, 13 bps lower. Merrill Lynch's CDS costs firmed 17 bps to 273 bps bid, 283 bps offered. Morgan Stanley's CDS costs tightened 22 bps to 305 bps bid, 315 bps offered.

In the secondary market, the two new tranches from Plains All American/PAA Finance traded better late in the day.

W.R. Berkley's notes traded about 5 bps tighter.

Vodafone's notes stayed wrapped around the issue price.

Mizuho's notes traded at 149 bps offered, a source said.

Wyndham Worldwide Corp.'s notes reopened on Monday firmed about 1 bp, while Coca-Cola Co.'s new notes have seen light trading activity.

Domtar Corp.'s notes (Baa3/BBB-/) sold last week have firmed nearly 20 bps on the offer side.

Treasuries traded lower and yields climbed across the bond curve on better retail sales data. The benchmark 10-year note yield rose to 2.12% from 2.03%. The 30-year bond yield climbed to 3.27% from 3.17%.

Plains sells $1.25 billion

Plains All American Pipeline and PAA Finance jointly sold $1.25 billion of senior notes (Baa2/BBB-/) in two tranches, a market source said.

A source said there was roughly $7 billion on the books for the deal.

"It went really well," the source said.

The $750 million of 3.65% 10-year notes were priced at Treasuries plus 160 bps. The notes sold at the tight end of talk in the 165 bps area.

A $500 million tranche of 5.15% 30-year bonds sold at 195 bps over Treasuries. The bonds also priced at the low end of guidance in the 165 bps area, plus or minus 5 bps.

Active bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to fund a portion of consideration for the acquisition of BP's Canadian natural gas liquids business. Pending that use, the proceeds may be used for general partnership purposes.

There is a change-of-control at 101 if the acquisition is not done by June 1.

In the secondary market, the notes due 2022 were seen offered at 153 bps, a trader said.

The 30-year bonds traded tighter at 191 bps bid, 180 bps offered.

The company handles the transportation and storage of petroleum products and is based in Houston.

Vodafone's five-years

Vodafone Group sold $1 billion of 1.625% five-year notes (A3/A-/) to yield Treasuries plus 80 bps, a source close to the trade said.

The paper sold at the tight end of guidance in the 80 to 85 bps range, the source added.

Barclays Capital Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and RBS Securities Inc. were bookrunners.

Vodafone was last in the market with a $1.1 billion deal in two tranches on March 9, 2011.

The notes traded flat at 80 bps offered late afternoon, a trader said.

The telecommunications company is based in London.

WR Berkley upsizes

W.R. Berkley priced an upsized $350 million of 4.625% 10-year senior notes (Baa2/BBB+/BBB+) at a spread of 260 bps over Treasuries, a market source away from the trade said.

The deal size was increased from $250 million, the source said.

Bank of America Merrill Lynch was active bookrunner. Passives were Goldman Sachs & Co. and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes, including the repayment of $200 million of 5.875% senior notes maturing on Feb. 15, 2013.

The notes due 2022 firmed to 255 bps bid, 253 bps offered in the secondary market, a trader said.

The insurance holding company is based in Greenwich, Conn.

KKR's $25-par notes

KKR Financial Holdings sold $100 million, or 4 million shares, of 7.5% 30-year senior notes (/BBB-/BBB) at par of $25, an informed source said.

There is an overallotment option of $15 million to be used within 30 days.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The specialty finance company is based in San Francisco.

Colony's preferreds

Colony Financial priced $130 million, or 5.2 million shares, of 8.5% perpetual series A cumulative redeemable preferred stock shares at a liquidation preference of $25, according to an FWP with the Securities and Exchange Commission.

The shares sold at the low end of guidance from the previous day between 8.5% and 8.625%. The deal was upsized from $75 million, or 3 million shares.

There is an overallotment option of 780,000 shares.

Barclays Capital Inc., Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and UBS Securities LLC were bookrunners.

Proceeds are being used to repay amounts under a revolving credit facility, to acquire target assets, for working capital and general corporate purposes.

Colony provides real estate investment and financing for real estate-related debt instruments and is based in Santa Monica, Calif.

Wyndham flat

Wyndham Worldwide's 4.25% notes due 2022 firmed 1 bp to 234 bps bid, 228 bps offered on Tuesday, a trader said.

The issue was reopened on Monday to add $150 million and the notes (Baa3/BBB-/) priced at a spread of Treasuries plus 235 bps.

The lodging company is based in Bethesda, Md.

Coca-Cola trading

Coca-Cola's notes (Aa3/A+/A+) sold on Friday are not trading very much, a trader said.

The 0.75% three-year notes were seen offered early on Tuesday at 33 bps. The $1 billion tranche priced at a spread of Treasuries plus 35 bps.

Coca-Cola's 1.65% notes due 2017 traded at 77 bps offered on Tuesday, a trader said. Coca-Cola sold $750 million of the notes at Treasuries plus 80 bps.

The soft drink company is based in Atlanta.

Domtar better

Domtar's 4.4% senior notes due 2022 traded on Tuesday at 226 bps offered, a trader said.

The company sold $300 million of the 10-year notes at Treasuries plus 245 bps on March 7.

Domtar is a paper products maker based in Montreal.

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