Norddeutsche Landesbank, Yale bring deals ahead of jobs data; Bank of America paper tightens

By Cristal Cody and Aleesia Forni

Virginia Beach, April 3 - Activity in the investment-grade bond market was measured on Thursday ahead of Friday's all-important nonfarm payrolls data.

The session saw Germany's Norddeutsche Landesbank-Girozentrale sell a $500 million issue of 6.25% 10-year subordinated tier 2 notes at par, an informed source said.

Meanwhile, Yale University sold $250 million of 2.086% five-year taxable bonds at par with a spread of Treasuries plus 30 basis points, a market source said.

The source noted that the issue priced tight of talk, which was set at Treasuries plus 35 bps.

Yale's sale comes on the heels of a $500 million 4.678% issue of series C taxable bonds from the Massachusetts Institute of Technology, which priced with a spread of Treasuries plus 108 bps on Tuesday.

The session also saw International Bank for Reconstruction and Development (World Bank) price an offering of notes, though details of the sale were not available at press time.

Thursday's primary action pushed the week's total supply to roughly $14.4 billion, just short of earlier predictions of a $15 billion week.

With the market's focus set on March's employment data, another subdued session is expected for the primary market to close out the week.

In the secondary market, Bank of America Corp.'s 4% senior notes due 2024 brought a week ago traded 15 bps better than issuance, a trader said.

High-grade bond spreads ended mostly flat, according to market sources.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 67 bps.

Market activity was quiet on Thursday, with some sources citing the slowdown due to the Labor Department's pending March employment report on Friday and the large amount of recent primary supply.

"We saw a flurry on Tuesday," one source said. "There was some indigestion as a result of that, and that could be enough to potentially cause a pause."

Yale sells taxable bonds

Yale University priced $250 million of 2.086% five-year taxable bonds with a spread of Treasuries plus 30 bps, according to a market source.

The notes (Aaa/AAA/) priced at par.

Pricing was tighter than talk, which was set at Treasuries plus 35 bps.

Barclays and Goldman Sachs & Co. were the joint bookrunners.

Nord/LB new issue

Norddeutsche Landesbank-Girozentrale priced $500 million of 6.25% 10-year subordinated tier 2 notes at par on Thursday, according to an informed source.

BNP Paribas Securities Corp., Nomura Securities, J.P. Morgan Securities LLC, RBS Securities Inc. and HSBC Securities (USA) Inc. were the bookrunners.

The commercial bank is based in Hanover, Germany.

Bank of America firms

Bank of America's 4% notes due 2024 (Baa2/A-/A) tightened 3 bps from Tuesday to 122 bps bid on Thursday and 15 bps better than issuance, according to a trader.

Bank of America sold $2.75 billion of the notes on March 27 at 137 bps over Treasuries.

The financial services company is based in Charlotte, N.C.

Bank/brokerage CDS flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher, according to a market source.

Bank of America's CDS costs eased 1 bp to 64 bps bid, 67 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 74 bps bid, 77 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 56 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs were flat at 35 bps bid, 38 bps offered.

Merrill Lynch's CDS costs eased 1 bp to 69 bps bid, 72 bps offered. Morgan Stanley's CDS costs were unchanged at 82 bps bid, 85 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended flat at 88 bps bid, 91 bps offered.

Paul Deckelman contributed to this review.

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