United Technologies, Bank of Ireland, National Australia Bank, JPMorgan price; financials widen

By Andrea Heisinger and Cristal Cody

New York, Feb. 23 - The high-grade bond market sprung back into action on Tuesday after several days of minimal issuance. New deals were priced by United Technologies Corp., Bank of Ireland, National Australia Bank Ltd. and JPMorgan Chase & Co.

United Technologies had the only sale on the industrial side of the market for the day and also the largest at $2.25 billion in two tranches. The sale consisted of $1.25 billion of 10-year notes and $1 billion of 30-year bonds.

Both tranches eventually priced tight to talk after it was revised from initial whispers.

National Australia Bank sold $1.25 billion of five-year notes by mid-afternoon, soon after launching. The notes priced at the tight end of guidance, a source said.

JPMorgan Chase announced its $1.1 billion sale of three-year floating-rate notes abruptly in the afternoon, and priced it soon after.

Another sale from overseas came from the Bank of Ireland, which sold $1 billion of two-year notes later in the day. They are guaranteed by the Irish government.

A general tightening of spreads may have urged some issuers into the market that were hesitant in recent days due to high new issue concessions.

According to one source, spreads have come in considerably in recent weeks - in some cases by 25 basis points.

"That could explain it," a syndicate source said about why more issuers are coming to the market. "I think it's also that they haven't issued [recently]."

High-grade trading jumped about 27% on Tuesday as Treasuries did an about-face, according to sources.

Overall Trace volume ended the day at about $15 billion.

Meanwhile, the yield on the 10-year Treasury note tightened to 3.68% from 3.80% on Monday. In addition, the yield on the 30-year Treasury bond firmed 10 bps to 4.63%, according to a market source.

Also on Tuesday, the CDX Series 13 North American high-grade index was wider by 3 bps at a mid bid-asked spread level of 94 bps, a source reported.

In the secondary market, United Technologies' and National Australia Bank's new offerings tightened in trading. But the financials sector, including paper from Bank of America Corp., Citigroup Inc. and Merrill Lynch & Co. Inc. ended the day weaker, sources said.

United Technologies taps market

Building and aerospace company United Technologies priced the largest deal of the day with $2.25 billion of senior unsecured notes (A2/A/A+) in two tranches by late afternoon, an informed source said.

The $1.25 billion of 4.5%10-year notes priced to yield a spread of Treasuries plus 87 bps. The 10-year notes were initially whispered in the mid-90 bps area, the source said, and that was later revised to 90 bps. The tranche priced tight to that.

A $1 billion tranche of 5.7% 30-year notes priced at Treasuries plus 109 bps. This tranche was whispered at "25 [bps] back from the 10-year notes," the source said. Talk was later revised to the 112 bps area, and the notes priced at the tight end of that.

The bookrunners for the 10-year notes were Bank of America Merrill Lynch, BNP Paribas Securities, Citigroup Global Markets, Deutsche Bank Securities and RBS Securities.

Bank of America Merrill Lynch, Citigroup, Goldman, Sachs & Co., HSBC Securities and J.P. Morgan Securities ran the books for the 30-year bonds.

United Technologies last sold bonds on Dec. 15, 2008, when it priced $1.25 billion of 6.125% 10-year notes at Treasuries plus 360 bps.

That is in sharp contrast to the 87 bps the company's 10-year notes sold at more than a year later.

"It's kind of crazy," a source who worked on the deal said. "It's unbelievable how far we've come since then. It also shows how bad things got."

Books totaled about $7.5 billion for the sale, with slightly more interest in the 10-year notes, a source close to the sale said.

Proceeds are going to fund the acquisition of General Electric Security from General Electric Co. for $1.8 billion and also to repay commercial paper.

The issuer is based in Hartford, Conn.

NAB sells $1.25 billion

National Australia Bank priced $1.25 billion of 3.75% five-year notes (Aa1/AA/AA) at 140 bps over Treasuries, an informed source said.

They were sold under Rule 144A.

The sale was announced in the morning and priced quickly, the source said, adding that it was unusual that it did not go overnight from Monday.

The notes priced at the tight end of guidance, which was in the 140 bps to 143 bps range.

The books were run by Bank of America Merrill Lynch, Deutsche Bank and Wells Fargo Securities.

The international financial services group is based in Melbourne, Australia.

IG primary regains life

Companies were out in force selling bonds by late in the day, with two of the day's offerings announced mid-day.

United Technologies and National Australia Bank both announced their sales in the morning, with JPMorgan and Bank of Ireland following their leads later.

"It was a little strange, but I think it was another case of 'who goes first,'" a market source said.

Issuance has been light for two weeks, other than one day the previous week that saw three new deals rushed into the market.

Conditions seemed ripe enough at the top of Tuesday for bookrunners to give the go ahead call, the market source said.

"Things were OK yesterday, but no one went," he said. There was one split-rated sale from Wyndham Worldwide Corp. that priced on Monday.

The tone was "good" by Tuesday morning, a source said, but "trailed off this afternoon, unfortunately."

Despite that, at least one syndicate source said his desk had at least one or two deals coming on Wednesday and possibly Thursday this week.

Another source described the rest of the week as "quiet, from my perspective."

Both agreed that the coming week should see a large influx of new bonds as more companies are able to issue following earnings announcements.

JPMorgan quickly prices floaters

JPMorgan priced $1.1 billion of three-year floating-rate notes (Aa3/A+/AA-) at par to yield Libor plus 65 bps, a market source away from the sale said.

J.P. Morgan Securities ran the books.

The financial services company is based in New York.

Bank of Ireland offers guaranteed notes

The Bank of Ireland sold $1 billion of 2.75% two-year notes (Aa1/AA) at 204 bps over Treasuries, a market source away from the sale said.

Price talk was at mid-swaps plus 175 bps, the market source said.

The notes are guaranteed by the Republic of Ireland and were sold under Rule 144A.

Bookrunners were Bank of America Merrill Lynch, JPMorgan, Morgan Stanley & Co. Inc. and Nomura Securities.

The commercial bank is based in Dublin.

United Technologies tighter

The new $2.25 billion offering in the primary from United Technologies on Tuesday firmed in secondary trading, sources said.

The 4.5% notes due 2020, which priced at Treasuries plus 87 bps, were seen earlier at 83 bps and later by one trader at 86 bps over Treasuries.

By late in the day, the 10-year notes had firmed to 82 bps bid, 81 bps offered, a trader said.

In addition, the 5.7% bonds due 2040, which priced at Treasuries plus 109 bps, were seen in the afternoon at 107 bps bid, 104 bps offered, according to one source.

Headed in to the close, the 30-year bonds were quoted at 106 bps bid, 104 bps offered, according to a trader.

Citigroup, financials widen

Meanwhile, the financials sector ended its lucky streak and moved out on Tuesday after tightening as much as 15 bps overall over the past week, according to a source.

For example, Bank of America's outstanding notes were wider by late Tuesday.

The 6.5% notes due 2016 were 9 bps weaker at 155 bps over Treasuries, one source said.

Also, Charlotte, N.C.-based Bank of America's 7.625% notes maturing in 2019 widened to 213 bps from 207 bps a day earlier.

Meanwhile, New York-based Citigroup's 8.5% notes due 2019 also moved out, a source said. The notes widened 10 bps to 267 bps over Treasuries.

In addition, the 6.875% notes due 2018 from New York-based Merrill Lynch widened to 237 bps from 228 bps on Monday, one source said.

National Australia firms

Elsewhere in secondary trading, the new notes from National Australia Bank tightened, according to a source.

National Australia Bank priced $1.25 billion of 3.75% notes due 2015 at Treasuries plus 140 bps earlier on Tuesday.

Later in the day, a trader "just saw FTT 139/136."

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