Bank of America prices FDIC issue; Wisconsin Public Service taps primary; FDIC-backed notes a focus

By Andrea Heisinger

New York, Dec. 1 - Bank of America Corp. and Wisconsin Public Service Corp. each priced deals Monday at opposite ends of the size spectrum.

Bank of America became the latest in a string of banks taking advantage of the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee, following three FDIC-backed deals for other lenders last week. More are expected to price throughout the week.

The secondary market saw light trading and was mainly focused on the performance of the FDIC-backed issues.

B of A prices $9 billion

In the largest FDIC-backed note offering yet, Bank of America priced $9 billion in four tranches late Monday.

The offering consisted of both fixed- and floating-rate notes, although three of the four tranches were floaters.

Full terms were not available from the bookrunner at press time.

The largest tranche was $6.75 billion of notes due 2012.

The rest were floating-rate notes.

This included $1 billion of two-year floaters priced at par to yield three-month Libor plus 50 basis points.

The $750 million of three-year floaters with quarterly interest payments priced at par to yield three-month Libor plus 82 bps.

The final tranche was $500 million of three-year floaters priced at par to yield one-month Libor plus 76 bps. They have interest paid monthly.

The notes are guaranteed until their maturity or June 30, 2012.

Banc of America Securities LLC ran the books.

Citi plans FDIC deal

The string of banks taking advantage of the FDIC-backed offerings continues, with Citigroup Inc. announcing Monday it plans to price fixed- and floating-rate guaranteed notes.

The issue is expected to price Tuesday, a source said. There has been no size set.

Citigroup Global Markets is the bookrunner.

Wisconsin utility does deal

Wisconsin Public Service priced a $125 million issue of first mortgage bonds Monday, a source close to the deal said.

The seven-year bonds priced at par to yield 6.375%, or Treasuries plus 434.5 bps.

Bookrunners were J.P. Morgan Securities Inc., Citigroup Global Markets, UBS Investment Bank and Banc of America Securities.

The source said they "literally had the Wisconsin books open for 15 minutes" and that despite it being a "tiny deal," it showed great interest.

Investors are continuing to look at rates, and those on this deal were attractive, he said.

Primary focused on FDIC deals

The main attraction in the primary market remained the FDIC-guaranteed deals. Bank of America's was the fourth in a continuing string of the AAA-rated offerings.

"The Treasury-guaranteed deals are going well," a source said. "We expect [Citigroup's] to go well as well."

Many names that were expected to issue have already done so or have formally announced the deals.

Another name that's been floating around as a possible issuer under the FDIC guarantee is Wells Fargo. No one could confirm the rumblings late Monday, but it was reported that they could issue later in the week.

Even the Citigroup offering, which some said will price Tuesday, could price later.

"It really depends on the overnight for Asia and Europe," a source said. "Timing is up in the air right now."

The declaration that the country is in a recession appeared to have minimal impact on the investment-grade bond market to start the week.

A source said he saw little negativity by late afternoon, although he acknowledged that "everyone's jammed with these FDIC deals."

Dominion bonds tighter

Dominion Resources, Inc.'s recent issue of 8.875% bonds due 2019 was seen tighter on Monday, at 645 bps bid to the put, a trader said. This was in from pricing at 678.9 bps.

BNSF in slightly

A recent issue of 7% notes due 2014 from Burlington Northern Santa Fe Corp. was seen in about 5 bps from pricing, at 495 bps bid. They priced at 500 bps.

Bank, broker CDS wider

Both bank and broker credit-default swaps were wider Monday afternoon, a trader said.

They were each seen 5 to 15 bps wider generically, the trader said.

Financials remain focus

Although they are being traded off agency desks, the focus remained on the large FDIC-backed issues from financial names, a trader said.

Those have essentially been the only issues since last Tuesday when there were two industrial names pricing deals.

Wyeth, AmEx big movers

Wyeth Pharmaceuticals' 5.5% bonds due 2014 were seen tightening around 41 bps late Monday, despite news of scrutiny for drug trials abroad, including this company's.

American Express Credit Corp.'s 7.3% bonds due 2013 were seen widening nearly 30 bps. The company's stocks, along with many other financial names, were seen dropping Monday on more bad economic news.

Economy boosts Kraft trading

Kraft Foods Inc. was seen as the top-traded bond early Monday afternoon as the United States was officially declared in a recession.

The convenience food company's 4.125% bond due 2009 was the most traded.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.