ANZ Banking, Indianapolis Power price private sales; banks, telecoms widen; Newfield rises

By Andrea Heisinger and Cristal Cody

New York, Nov. 15 - After a sizeable flow of new deals to start the week, the high-grade bond market was subdued on Tuesday with a couple of trades done privately.

There was the first covered bond sale to come from an Australian financial name: Australia and New Zealand Banking Group Ltd.'s $1.25 billion of five-year paper.

Indianapolis Power & Light Co. priced $140 million of 30-year first mortgage bonds.

Both of these deals were done under Rule 144A and Regulation S.

News out of Italy and the euro zone overnight, mainly about Italy's debt hitting a 7% yield and contagion fears for France, left the market with a negative tone at the open.

This, in turn, led to any potential issuers standing down for the day.

"I think anyone looking at the market decided to wait it out," a syndicate source said.

By the time the market closed, conditions had improved after "Italy got its government in order, and stuff brought the market out of the red," the source said.

Better-than-expected retail sales figures were released and also gave the market a boost by the close.

"There weren't really any terrible headlines," the source said.

Potential issuers are likely to look at the market on Wednesday, and volume could rise if conditions are acceptable at the open.

"I know we were supposed to be busy today, so we'll see what tomorrow looks like," a market source said.

No immediate secondary trading was seen in ANZ Banking's new issue, but bank and financial paper overall traded 5 basis points to 15 bps weaker.

"The weakness was led by Bank of America [Corp.] and Morgan Stanley," a trader said.

The Markit CDX Series 17 North American Investment Grade index eased 2 bps to a spread of 132 bps.

HSBC Holdings plc's 10-year notes, which priced Monday, were among the exception and traded tighter, a trader said.

Telecommunication bonds led by Time Warner Cable Inc. and DirecTV Holdings LLC and DirecTV Financing Co., Inc. traded 5 bps to 10 bps weaker.

"Everything was definitely weaker today," a trader said.

Clorox Co.'s new 10-year notes traded wider on the day.

In other trading, Newfield Exploration Co.'s split-rated notes were seen going out stronger.

Overall trading volume jumped to more than $12.5 billion on Tuesday from $9 billion the previous day.

Treasuries moved lower, erasing early morning gains. The benchmark 10-year note yield rose 2 bps to 2.06%. The 30-year bond yield closed up 1 bp at 3.1%.

ANZ's first covered bonds

Australia and New Zealand Banking Group sold a benchmark $1.25 billion of 2.4% five-year covered bonds after the deal was announced the previous day, an informed source said.

This is the first covered bond sale from an Australian financial institution.

ANZ priced the bonds (Aaa/AAA) at a spread of mid-swaps plus 115 bps, or Treasuries plus 158.2 bps. They were sold in line with talk in the mid-swaps plus 115 bps area.

ANZ Securities, Citigroup Global Markets Inc., Nomura Securities and UBS Securities LLC were the bookrunners.

The financial services company is based in Melbourne, Australia.

Indianapolis Power's bonds

Indianapolis Power & Light sold $140 million of 4.875% 30-year first mortgage bonds (A3/BBB/BBB+) to yield Treasuries plus 180 bps, a market source said.

Barclays Capital Inc. was the bookrunner.

The electric company is based in Indianapolis.

Financials widen

Charlotte, N.C.-based Bank of America's 3.75% notes due 2016 traded 15 bps wider at 485 bps bid, 470 bps offered.

Paper from New York-based Morgan Stanley also was weaker on the day. A trader saw Morgan Stanley's 3.8% notes due 2016 out 25 bps at 480 bps bid, 470 bps offered.

HSBC firms

HSBC Holdings' 4.875% 10-year notes traded better at 275 bps bid, 270 bps offered, a trader said Tuesday.

The notes (Aa2/AA-/AA) were sold in a $900 million tranche at a spread of Treasuries plus 285 bps.

The unit of London-based financial services company HSBC is based in New York.

DirecTV drops

DirecTV's 5% notes due 2021 widened 10 bps to 230 bps bid, 220 bps offered, a trader said.

The notes (Baa2/BBB/BBB-) were sold in a $1.5 billion offering at 155 bps over Treasuries on March 7.

The satellite TV company is based in El Segundo, Calif.

Clorox weaker

The 3.8% senior notes due 2021 that Clorox sold Monday traded wider on Tuesday at 192 bps bid, 187 bps offered, according to a trader.

Clorox priced $300 million of the 10-year senior notes (Baa1/BBB+) at a spread of Treasuries plus 187.5 bps.

The consumer products company is based in Oakland, Calif.

Newfield rises

In the secondary market, Newfield Exploration Co.'s split-rated 5.75% senior notes due 2022 traded at 104.5 bid, 105.5 offered, a trader said.

The notes (Ba1/BBB-/BB+) were sold on Sept. 27 at 99.956.

Newfield Exploration is a Woodlands, Texas-based oil and gas exploration and production company.

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