FPL Group Capital releases reopening terms, primary deserted prior to holiday; spreads mostly steady

By Andrea Heisinger and Paul Deckelman

New York, Dec. 23 - There was little in the way of new issues Tuesday as syndicate desks thinned out further and companies waited until after the holidays to issue.

A market source said "things were dead" in the primary by late afternoon. There were no deals expected to price Wednesday prior to the early market close, he said.

In the secondary market Tuesday, advancing issues continued to lead decliners, by a more than five-to-four ratio. Overall market activity, reflected in dollar volumes, rose by 16% from Monday's pace.

Spreads in general were seen little changed, in line with steady Treasury yields; for instance, the yield on the benchmark 10-year issue inched up by 1 basis point to 2.18%.

FPL gives reopening terms

FPL Group Capital announced terms for the reopening of its 7.875% notes due 2015 to add $50 million.

The reopening priced late Monday, a market source said.

The notes priced at 106.861 to yield 6.627% with a spread of Treasuries plus 515 bps.

Total issuance is $500 million, including $450 million issued Dec. 12.

Bookrunners were Banc of America Securities LLC, Citigroup Global Markets Inc., Deutsche Bank Securities and Mizuho Securities.

Southwest give more deal terms

Southwest Airlines Co. gave additional terms Tuesday for its issue that priced Monday.

The $400 million of 10.5% senior secured notes due 2011 was a private placement under section 4(2), according to a Securities and Exchange Commission filing.

The notes' proceeds will be used for corporate purposes including cash collateral for some of the company's fuel hedging arrangements.

The filing also says the notes are not callable except in instances involving the casualty loss of aircraft securing the notes.

New deals done for week

Market sources agreed that there would be no new issues Wednesday prior to the holiday, and that there likely wouldn't be any Friday either.

"There was nothing going on today," a source said. "We don't see anyone doing anything tomorrow."

There were one or two new issues expected this week under the Federal Deposit Insurance Corp. Temporary Liquidity Program, but after none priced Monday, it was decided that issuers were waiting until after the holidays.

A source said General Electric Capital Corp. is planning another issue of notes under the program, after pricing $6.5 billion in several tranches at the beginning of December and reopening it several times.

He said since this issue wasn't pricing until January, others were likely holding off as well.

There is expected to be a wider variety of names pricing under the program in 2009 until it ends in June.

The market tone was "decent" by late afternoon Tuesday, but it was hard to gauge because of a lack of deals, a source said.

"I don't think there was much to go on, but it looked OK," he said.

'Balancing the books'

A secondary trader saw little real activity going on; he said it was mostly a case of "a lot of people trying to balance their books" before the fast-approaching end of the year.

Potential buyers outnumbered potential sellers, he said - there were "more offer-wanteds than bid-wanteds, but there's really not a lot of activity. It's mainly odd-lot adjustments to their portfolio at this time of year. These guys are just trying to get rid of some of the stuff that they need [to get] off their books, and trying to buy the stuff that they've been looking to pick up."

He said there was "no movement in stuff today - there's no news that's going to impact anything. It's more year-end window dressing than anything else."

CIT up on bank, TARP news

A trader in financial issues said that CIT Group Inc.'s bonds were "a couple of points better," apparently helped by the news that the New York-based commercial finance lender had received federal approval to convert to a bank holding company and had been granted $2.33 billion from the federal government's TARP bank bailout fund.

A market source saw CIT's floating-rate notes due 2011 firm to 72.75 bid - all of the sometimes problem-plagued company's bonds trade in dollar-price terms rather than on a spread basis - while its 4.25% notes due 2010 hovered at 92 bid. Its shortest actively traded issue, the 4.125% notes coming due next November, moved up to 95.

Financials otherwise quiet

Otherwise, the first trader said, it was "relatively quiet - things just continued to grind tighter, but there was nothing specific that stood out in terms of trades."

Trading, he said "was thin out there," with just "a handful" of trades and "people cleaning some stuff up. There wasn't much to talk about."

FDIC debt continues to tighten

A market source saw some of the recently priced FDIC-backed financial issue debt firmer on the session, with Bank of America Corp.'s 3.125% notes due 2012 at 74 bps over comparable Treasury issues, having narrowed from 96 bps over on Monday. The bonds were well in from the 150 bps over level at which the Charlotte, N.C.-based banking giant priced $1.5 billion of the bonds on Dec. 15.

Also tighter was General Electric Capital Corp.'s new 3% notes due 2011; the financial arm of industrial conglomerate General Electric Co. priced $3.5 billion of the bonds at 212 bps over on Dec. 4 as part of a $6.5 billion four-tranche mega-deal. On Tuesday, the bonds were seen at 67 bps bid, versus 81 bps bid on Monday.

Older financials a little wider

Among the more established financials, a source saw Goldman Sachs Group Inc.'s 6.75% notes due 2037 widen out by around 14 bps in fairly active trading to the 570 bps level. Its 6.15% notes due 2018 also widened, to around the 480 bps level. And its 5.70% notes due 2012 were out more than 40 bps, to the 600 bps level.

ProLogis up on asset-sale

Elsewhere, asset-sale news was pushing the bonds of industrial real estate investment trust ProLogis sharply higher.

A trader said that from where he sat, the "news of the day" was the sharp rise in ProLogis' 5¾% notes due 2016, which zoomed to 52 bid, 53 offered, up 10 points on the day, while its 2¼% convertible notes due 2037 gained 4 points to 43 bid - on the news that the REIT is selling its China business and 20% of its Japanese operations to GIC Real Estate for $1.3 billion. The sale is part of a plan which the Denver-based company announced last month to de-leverage its balance sheet by at least $2 billion.

© 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.