New York Life, Sempra, Diamond Offshore, Credit Agricole tap market; bank bonds rebound

By Andrea Heisinger

New York, Oct. 5 - New York Life Insurance Co., Sempra Energy, Diamond Offshore Drilling, Inc. and Credit Agricole SA were among the investment-grade bond issuers to price new paper on Monday.

The tone was much-improved from Friday when dismal unemployment numbers came out for September.

New York Life Insurance had one of the day's marquee sales, pricing $1 billion of 30-year bonds at the tight end of talk.

Sempra Energy and Diamond Offshore Drilling each priced 30-year bonds. Sempra sold an upsized $750 million, while Diamond Offshore priced $500 million.

France's Credit Agricole sold $1 billion of hybrid perpetual notes.

United Air Lines, Inc. also sold $659.107 million of split-rated pass-through certificates off of the high-grade syndicate desk, a source close to the deal said. Terms were not available at press time.

The secondary saw the day's new sales improving only marginally. Sempra, New York Life and Diamond Offshore's bonds were quoted by traders as tightening 5 basis points or less.

Bank bonds rebounded on good news, with those from Bank of America Corp. and Morgan Stanley trading heavily.

Spreads were mixed as Treasury yields were all over the place from the previous day, a source said.

The five-year note was unchanged at 2.2%, while the 10-year note was 1 bp better at 3.21%. The 30-year bond was wider by 1 bp to yield 4.01%.

NY Life prices $1 billion

New York Life Insurance sold $1 billion of 6.75% 30-year surplus notes at Treasuries plus 275 bps, an informed source said.

The deal came in at the tight end of talk that was in the 287.5 bps area, a source said. It was priced via Rule 144A.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Goldman Sachs & Co. and J.P. Morgan Securities Inc.

The mutual life insurance company is based in New York City.

Sempra Energy upsizes offering

Utility company Sempra Energy priced an upsized $750 million of 6% 30-year senior unsecured notes at 205 bps over Treasuries.

The size was initially $500 million, a source close to the sale said.

Bank of America Merrill Lynch, JPMorgan and RBS Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, including repayment of commercial paper.

The issuer is based in San Diego.

Credit Agricole sells hybrid perpetuals

Credit Agricole priced $1 billion of 8.375% hybrid perpetual notes at par, an informed source said.

The notes have the fixed-rate coupon until Oct. 13, 2019 and then switch to a floating rate of three-month Libor plus 698.2 bps

The Rule 144A notes priced at a spread of "roughly 515 bps over [Treasuries]," the informed source said.

Bookrunners were Bank of America Merrill Lynch, Calyon Securities and JPMorgan.

The retail banking group is based in Paris.

Top-heavy week expected

New deals are expected to crop up early in the week and taper off ahead of the long Columbus Day weekend, sources said late in the day.

A source on a smaller syndicate desk said "we have a couple of deals tomorrow, if that gives you any indication of what [supply] is out there."

The tone was "definitely better today than it was Friday," a market source said. The bond market, along with others, took a turn for the worse on Friday as high unemployment numbers for September were released.

"A lot of deals got done, and they did well," the source said. "Issuance should hold steady [for the] rest of the week."

There haven't been any specific new deals announced, but Tuesday and Wednesday are expected to have the most issuance for the week, with "maybe a couple" getting done on Thursday, the syndicate source said.

"We saw a lot of [bonds] bounce back today," he said. "There was good news on the bank side."

Diamond Offshore sells 30-year

Diamond Offshore Drilling priced $500 million of 5.7% 30-year senior unsecured notes at Treasuries plus 175 bps, a market source said.

Goldman Sachs and JPMorgan ran the books.

Proceeds are going to general corporate purposes.

The offshore oil and gas drilling contractor is based in Houston.

NY Life bond tightens slightly

A new 6.75% 30-year note from New York Life Insurance was trading a few basis points better in the gray market, a trader said.

The bond was quoted at 272 bps bid soon after selling, she said, adding that there were "lots of interested buyers."

Bank bonds top trading

Outstanding bonds from Bank of America Corp. and Morgan Stanley were among those trading at the highest volume by early afternoon, a trader said.

A bond from Wells Fargo & Co. was also active.

Morgan Stanley had the top-trading bond, with its 5.625% notes due 2019. The bank's 7.3% bond, also due in 2019, was popular as well.

Bank of America's 7.625% bond due 2019 and 7.375% due 2014 were also seen trading actively. The bond due 2014 was also heavily traded on Friday.

None of these bonds were sold via the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

Wells Fargo's fairly recent sale of 3.75% notes due 2014 was behind the Morgan Stanley and Bank of America bonds in terms of volume.

A trader gave a few possible reasons why the Bank of America and Morgan Stanley bonds were trading at high volume.

She noted that Goldman Sachs is recommending large banks' paper because they'll outperform the regional names. She also said the "Street likes Ken Lewis being out of B of A."

The final possible reason was because Morgan Stanley hired "a top guy" in the form of Kevin Dunleavy away from Bank of America Merrill Lynch.

He will be a managing director in the sales and trading division.

Diamond Offshore bond unchanged

The new 5.7% bond due 2039 priced at 175 bps over Treasuries by Diamond Offshore Drilling was only better by a few basis points once it was freed for trading, a trader said.

He quoted the bond at 173 bps bid, 170 bps offered.

Sempra Energy 30-year better

San Diego-based utility company Sempra Energy's 6% bond due 2039 priced at 205 bps over Treasuries and was quoted as tightening slightly from that level, a trader said.

The bond was quoted at 200 bps bid, 197 bps offered.

Bank, broker CDS move tighter

Credit-default swaps for bank and brokerage names were better across the board by late afternoon, a trader said.

The bank names saw their CDS improve by 8 to 15 bps. Brokerage names moved similarly, with CDS tightening by 10 to 15 bps.

Lincoln National, KeyBank among movers

Two financial names were among those having bonds making large moves tighter or wider by late afternoon, a source said.

Lincoln National Corp.'s 4.75% bond due 2014 was better by about 40 bps from a week ago. The company sold its subsidiary in the United Kingdom within the past week.

Brazilian mining company Vale Overseas SA also saw its 5.625% bond due 2019 tightening about 40 bps from a week ago.

KeyBank NA had its 5.7% bond due 2012 move wider by nearly 40 bps as big banks' bonds were endorsed over smaller, regional names.

A 6.05% bond due 2012 from Merrill Lynch & Co. also moved between 35 and 40 bps wider from a week ago.

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