Goldman prices upsized notes; coming week seen busier; Goldman, Morgan Stanley stronger

By Andrea Heisinger and Cristal Cody

New York, July 22 - The trend of financial names selling bonds after announcing second-quarter earnings continued on Friday with a deal from Goldman Sachs Group, Inc.

The New York City-based investment bank sold an upsized $2.75 billion of 10-year notes at a level tighter than guidance.

Goldman's post-earnings sale followed in the footsteps of a handful of others earlier in the week, including Morgan Stanley and Bank of New York Mellon Corp.

Other than the one bond sale it was "mostly quiet" in the primary, a source said at day's end.

"There weren't any terrible headlines - except [the explosion] in Oslo - but nothing financial really," she said. "I think we'll see it pick up next week."

As more companies emerge from earnings blackout in the coming week, including more banks and financial names, deal volume is expected to rise.

"We should see something Monday, but if not then Tuesday for sure," the source said.

Goldman's new notes traded 13 basis points tighter in the secondary market. Other new financial paper also scored big on the day, a trader said.

The new notes from Morgan Stanley traded 15 bps to 20 bps better on Friday. Bank of New York Mellon's notes firmed about 5 bps.

"In general, financials are a little bit better, mostly unchanged," a source said. "Bank of America is only half a basis point tighter."

Trading otherwise was mostly quiet on Friday. Overall trading volume dropped to about $9 billion.

"The Greece optimism failed to materialize today, and there's the U.S. budget negotiations, with any excuse not to trade, it makes the markets very quiet," one source said.

The Markit CDX Series 15 North American investment-grade index eased 1 basis point to a spread of 93 bps, according to Markit Group Ltd.

Goldman's upsized 10-year

Goldman Sachs Group sold an upsized $2.75 billion of 5.25% 10-year notes in late afternoon at a spread of 230 bps over Treasuries, said a source away from the deal.

The notes (A1/A/A+) priced tighter than guidance in the 237.5 bps area, the source said. The size was increased from $2.5 billion as demand from investors grew.

Goldman Sachs & Co. was the bookrunner.

Proceeds are being used for general corporate purposes.

Goldman last sold 10-year notes in a reopening of 3.7% bonds due 2020 on July 21, 2010. Those notes priced at the exact spread of 230 bps over Treasuries.

In the secondary market, Goldman "traded as tight as 217 [bps]," a source said.

Morgan Stanley stronger

Morgan Stanley's two tranches of notes narrowed in the secondary market on Friday, a source said.

"Looks like trades have been tighter by about 15 [bps] and as much as 20 bps," the source said.

Morgan Stanley sold $2 billion of the notes (A2/A/A) on Thursday.

A $500 million tranche of 2.875% three-year notes priced at a spread of 220 bps over Treasuries and traded 15 bps to 20 bps tighter on Friday. "Most of the trades are wrapped around 202 [bps]," the source said.

The second tranche of $1.5 billion of 5.5% notes due 2021 firmed to the 233 bps to 235 bps area in trading. The notes priced at 250 bps over Treasuries.

The investment bank is based in New York City.

BNY Mellon firms

The Bank of New York Mellon's new notes (Aa2/AA-) traded tighter on Friday at a spread of 73 bps, a trader said.

"It's hanging in around new issue spreads," the trader said.

A $1 billion tranche of 2.3% notes due 2016 priced at Treasuries plus 78 bps.

The financial services company is based in New York City.

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