Lloyds, Sempra, Ameren, EQT, Canadian Pacific, Occidental price; EQT gains, Microsoft mixed

By Andrea Heisinger and Paul Deckelman

New York, May 12 - New issue volume slowed only slightly Tuesday, with sales from Lloyds Banking Group, Sempra Energy, Ameren Corp., EQT Corp., Canadian Pacific Railway Co. and Occidental Petroleum Corp.

Wyndham Worldwide Corp. announced a sale of split-rated five-year senior notes, expected to price Wednesday.

Market tone remained up as sources predicted a slowdown in the pace of deals may not happen until the coming week. There are issues remaining on the table for the second half of this week.

In the secondary arena on Tuesday, a market source said the CDX Series 12 North American high-grade index was narrower, in by 2 basis points at a mid bid-asked spread level of 148 bps.

Advancing issues again led decliners, by a ratio of not quite three-to-two.

Overall market activity, reflected in dollar volumes, rose by 37% from Monday's levels.

Spreads in general were seen little changed, in line with generally steady Treasury yields; for instance, the yield on the benchmark 10-year issue was unchanged at 3.17%.

The continued flood of new deals was once again Topic A in the secondary market, with attention centered on how that paper was doing once it was freed for aftermarket dealings. The new EQT and Canadian Pacific deals were seen to have firmed solidly; however Occidental Petroleum's paper was little changed.

From Monday, Microsoft Corp.'s new bonds were seen mixed, while Anheuser Busch Cos. Inc.'s new debt mostly stayed around its issue levels.

Sempra increases offering

Sempra Energy increased the size of its sale by $350 million Tuesday, bringing it up to $750 million from $400 million, a source close to the deal said.

The 6.5% seven-year senior notes priced at 387.5 bps over Treasuries.

Price talk was in the low 400 bps area, the source said, with the deal coming in below that. It was "tightened and upsized," he said, due to demand from investors. The offering came in around four or five times oversubscribed, he said, confirming that investors remain hungry for high-grade bonds.

The proceeds are going to repayment of maturing long-term notes and commercial paper, among other purposes.

BNP Paribas Securities, Citigroup Global Markets and Deutsche Bank Securities ran the books for the San Diego-based utility.

EQT sale upsized

A sale of senior notes from EQT was upsized to $700 million from $500 million by the time it priced Tuesday afternoon, a market source said.

The 8.125% 10-year notes priced at Treasuries plus 500 bps. The proceeds are going to repay amounts under a revolving credit facility, among other uses.

Banc of America Securities LLC, Barclays Capital, Citigroup Global Markets, J.P. Morgan Securities and Wachovia Capital Markets were bookrunners.

The energy exploration and production company is based in Pittsburgh.

Canadian Pacific prices 10-years

Calgary-based Canadian Pacific Railway sold an upsized $350 million of 7.25% 10-year notes at 412.5 bps over Treasuries. The sale was increased from $300 million.

The proceeds are being used to partially finance the repurchase of certain outstanding long-term securities pursuant to a tender offer, among other purposes.

J.P. Morgan Securities and Morgan Stanley & Co. ran the books.

Occidental Petroleum upsizes

Occidental priced $750 million of 4.125% seven-year notes early Tuesday at Treasuries plus 160 bps. The oil, gas and chemical company increased the size of the sale from $600 million, a source said.

Barclays, Citigroup, J.P. Morgan Securities and UBS Investment Bank were tapped as bookrunners by the Los Angeles-based company.

Lloyds prices $3 billion

Lloyds Banking Group priced $3 billion of notes in two tranches backed by the United Kingdom guarantee program, a market source said late Tuesday.

The $500 million of two-year notes priced at 80 bps over Treasuries, while the $2.5 billion of three-year notes sold at Treasuries plus 100 bps.

The deal was sold via Rule 144A, and full terms were not available at press time.

Bookrunners were Banc of America Securities, Citigroup Global Markets, Goldman Sachs and Lloyds.

The financial services company is based in London.

Ameren sells five-year notes

Utility holding company Ameren priced $425 million of 8.875% five-year notes late Tuesday, a market source said. The sale was announced well into the afternoon and priced a while later.

It was sold at 698.2 bps over Treasuries.

Proceeds will be used to repay a portion of short-term debt totaling $300 million, with the same amount going to a capital contribution for subsidiary Cilcorp Inc.

The St. Louis-based company tapped BNP Paribas Securities, J.P. Morgan Securities and UBS Investment Bank as bookrunners.

Wyndham plans split-rate sale

Wyndham Worldwide announced an upcoming split-rated sale of five-year senior notes (Ba2/BBB-), according to a press release.

The deal is expected to price Wednesday, with the size yet to be determined.

Banc of America, Credit Suisse Securities, J.P. Morgan Securities and Citigroup are running the books off the investment-grade desk.

The hospitality company, based in Parsippany, N.J., is using proceeds to pay down a revolving credit facility.

The sale is being done concurrently with a $200 million sale of convertible bonds.

Flow to continue

Tuesday nearly kept pace with Monday in terms of new deals. And a slowdown is not expected any time soon, sources said late Tuesday.

"It's going to keep chugging along," a syndicate source said. "We have stuff slated for later in the week."

Others said they had things on their radar, but nothing set in stone.

"It's good to be a little busy," a source said, adding that Monday's 10 deals may have been too much.

"We should keep going through Memorial Day, I think," a second source said. "Isn't that when it slows down?"

Sources admitted that using the previous year as a model wasn't the best idea, as that is when the financial meltdown began.

The high level of issuance can't hold out for too long, one source said.

"I have a feeling it's all going to come to a crashing halt," he said.

Build America Bonds hold IG interest

The Build America Bonds being issued by state and local municipalities continue to find interest from investors on the investment-grade side, a market source said Tuesday.

They are "complicated," he said, but some are being done solely off the investment-grade syndicate desk because of the popularity. Others are done strictly off the municipal desk, he said, and still others are done off both.

"They're kind of interesting and some of them are a combo," he said. "A lot of people are interested in them, but they're not straight IG."

The program is part of the Federal stimulus program, with the government kicking in on the interest paid out. The bonds are meant to stimulate local and state economies.

EQT gets an 'A' for effort

When EQT Corp.'s new 8 1/8% notes due 2019 were freed for secondary dealings, a trader saw those bonds trading at a spread over comparable Treasury issues of 478 bps on the bid side. That was well in from the 500 bps over level at which the $700 million of new paper - upsized from $500 million originally - had priced earlier in the session.

Canadian Pacific trades up

Also pushing higher was Canadian Pacific Railway's $350 million of new 7.25% notes due 2019, upsized from the original $300 million.

The trader saw those bonds at 397 bps bid, 393 bps offered. The railroad operator had priced those bonds at a spread of 412.5 bps.

Occidental goes nowhere

However, Occidental Petroleum's new 4.125% notes due 2016 did not see much aftermarket activity. They were being quoted at 160 bps bid, 152 bps offered. The bonds - upsized from the original $600 million envisioned - priced at 160 bps over.

Microsoft turns mixed

Elsewhere, Redmond, Wash.-based software supremo Microsoft's three-part mega-deal, which priced on Monday, was seen having given up some of the early gains it notched, to turn mixed.

Its $2 billion of 2.95% notes due 2014 continued to firm - those bonds had priced at 95 bps over, and then tightened in initial dealings to 87 bps bid, 80 bps offered, and had improved further in Tuesday's trading to 80 bps bid, 75 bps offered.

However, its $1 billion of new 4.20% notes due 2019, which had priced at 105 bps over, and then had tightened to 95 bps bid, 90 bps offered, were seen on Tuesday as having widened back out from those tights to 104 bps bid, little changed from issue.

And its $750 million of 5.20% bonds due 2039, which had also priced at 105 bps over and then firmed in the secondary later Monday to 98 bps bid, 90 bps offered, widened back out to 110 bps bid, 107 bps offered, the trader said.

Anheuser Busch stays around issue price

St. Louis-based brewing giant Anheuser Busch's new three-part mega-deal was seen little changed from the levels at which the bonds had priced.

A trader saw its $1.55 billion of 5.375% notes due 2014, which had priced Monday at 337.5 bps over, virtually unchanged, bid at 338 bps.

Its $1 billion of 6.875% notes due 2019 widened slightly to 382 bps over from their 375 bps issue level.

And its $450 million of 8% bonds due 2039, which had priced at 390 bps over, were just slightly tighter at 388 bps.

Dow remains down

The trader also saw last Thursday's Dow Chemical Co. deal continuing to struggle in the secondary. The Midland, Mich.-based chemical manufacturer's $1.75 billion of 7.60% notes due 2014, which had priced at 550 bps to yield 7.676%, were trading "at 600 bps all day," he said, before finally tightening a little from that wide point to 585 bps - an improvement from the 595 bps bid, 575 bps offered level seen in initial trading Monday, but still far wide of the issue level.

Its $3.25 billion of 8.55% notes due 2019, which had priced at 525 bps over to yield 8.581% and then went home Monday at 590 bps bid, 570 bps offered, widened further on Tuesday to 596 bps bid, 586 bps offered.

Dow's $1 billion of 9.40% bonds due 2039 were seen by a market source at 562 bps over. Those bonds had priced on Monday at 512.5 bps over, to yield 9.444%.

CBS bonds trade off

A market source meantime saw CBS Corp.'s new $350 million of 8.875% notes due 2019 - which were being quoted on a dollar-price basis, rather than on spread - at 94 5/8, not much changed from 94½ bid, 95¼ offered on Monday, and well down from the 97.585 level at which they had priced on Friday to yield 9¼%.

The New York-based media giant's other issue, its 8.20% notes due 2014, $400 million of which priced at 98.796 to yield 8½%, were not among the notably active movers, the source said. Those bonds had traded lower Monday, finishing at 97¼ bid, 98 offered.

Bank, broker CDS costs seen mixed

In the credit-default swaps market, a trader said that CDS costs to protect holders of big-bank paper against a possible default were anywhere from 10 bps tighter to 10 bps wider on the day; for instance, Citigroup's debt-protection costs were 10 bps wider to 365 bps bid, 380 bps offered.

He also saw CDS costs for the bonds of former investment banks - which have turned into commercial banks - anywhere from 10 bps tighter to unchanged.

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