Citigroup, Entergy Gulf, L-3 Communications, Volvo, Ontario sell bonds; L:-3 trades tighter

By Andrea Heisinger and Paul Deckelman

New York, Sept. 29 - Citibank NA and Citigroup Funding Inc., Entergy Gulf States Louisiana LLC, L-3 Communications Corp., Volvo Treasury AB, Province of Ontario brought deals to market Tuesday.

In addition, Gannett Co., Inc. priced an upsized $500 million offering of split-rated notes in two tranches off the high-yield syndicate desk.

The Citibank and Citigroup Funding deal was late in pricing, and totaled $5 billion in four tranches. It follows a similar $5 billion sale of FDIC-backed notes on Sept. 15.

Entergy Gulf States priced $300 million of first mortgage bonds due 2024.

L-3 Communications upsized its sale to $1 billion in 10-year notes from $750 million.

Volvo Treasury was another issuer to upsize its sale. The unit of AB Volvo sold $750 million of notes due 2015.

Ontario was one of the first to price bonds for the day, selling $2 billion at a 10-year maturity.

The market was full of new deals, and those on syndicate desks were busy with end of the month and end of the third-quarter tasks, sources said.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 13 North American high-grade index widened by 1 basis point to a mid bid-asked spread level of 98 bps.

Advancing issues continued to lead decliners Tuesday, by a margin of not quite 10 to nine.

Overall market activity, reflected in dollar-volume totals, rose 42% from Monday's relatively sedate pace, when market activity subsided with the absence of some participants due to the Yom Kippur holiday.

Spreads in general were seen relatively little changed, in line with mostly steady Treasury yields; for instance, the yield on the benchmark 10-year note edged up 1 bp on Tuesday to 3.29%.

Among the new issues, the new L-3 Communications notes were seen having tightened solidly from the spread over comparable Treasuries at which those bonds had priced earlier in the session.

L-3 upsizes sale

L-3 Communications priced an upsized $1 billion of 5.2% 10-year senior notes at Treasuries plus 195 bps.

The amount was increased from $750 million. It priced at the tight end of guidance in the 212.5 bps area, a source close to the sale said.

Bank of America Merrill Lynch and Barclays Capital were bookrunners for the Rule 144A sale.

Proceeds are being used to redeem $750 million of 7.625% senior notes due June, 2012, and to repay a $650 million term loan.

The aircraft maintenance and technology subsidiary of L-3 Communications Holdings Inc. is based in New York City.

Citi sells $5 billion FDIC notes

Citibank NA and Citigroup Funding priced $5 billion of notes in four tranches backed by the Federal Deposit Insurance Corp. late in the day, an informed source said. The deal was sold after 5 p.m. ET.

The $1.25 billion tranche of 1.25% two-year notes priced at a spread of Treasuries plus 35.2 bps.

A $250 million tranche of two-year floating-rate notes priced at par to yield three-month Libor minus 3 bps.

A $1 billion tranche of three-year floaters priced at par to yield three-month Libor plus 0 bps.

Citibank NA was the issuer for the first three tranches.

The final tranche was by Citigroup Funding and was $2.5 billion of 1.875% three-year notes priced at Treasuries plus 46.5 bps.

Citigroup Global Markets was bookrunner.

The financial services company is based in New York City.

Entergy Gulf sells mortgage bonds

Entergy Gulf States Louisiana priced $300 million of 5.59% first mortgage bonds due 2024 at Treasuries plus 230 bps.

Bookrunners were Barclays Capital, Calyon Securities and Mizuho Securities.

The electric and natural gas subsidiary of Entergy Corp. is based in New Orleans.

Volvo sells 2015 notes

Volvo Treasury AB priced an upsized $750 million of 5.95% notes due 2015 at Treasuries plus 365 bps, an informed source said.

The size was initially $500 million, he said.

Bank of America Merrill Lynch and Citigroup Global Markets ran the books for the Rule 144A deal.

The unit of truck and commercial vehicle maker AB Volvo is based in Gothenburg, Sweden.

New deals plentiful

After a lull due to Yom Kippur and other factors at the start of the week, volume saw an uptick on Tuesday.

"We definitely noticed," a market source said. "Everyone was busy today."

Among the deals was a $5 billion sale in multiple tranches by Citigroup units. It was backed by the FDIC, and brings the total of bonds sold by Citigroup since the middle of September up to $12 billion.

"We were a little surprised, but not much," a syndicate source said. "They are one of the only ones who still can [issue under the FDIC program]."

Citigroup and Bank of America Corp. are about the only large banks still left to issue under the Temporary Liquidity Guarantee plan as they have not paid back the government bailout funds.

"They still have another month to do it [issue], but we'll see if they do," the syndicate source said.

The tone "wasn't much changed" on the day from Monday, a market source said.

A syndicate source said that he didn't pay much attention to issues on Tuesday due to work on "end of the month stuff," but added that his desk had a couple of things on tap for Wednesday.

A source at another desk also said he had a "solid calendar" for the remainder of the week.

"We should see a fair amount [tomorrow]," he said.

Gannett upsizes split-rated deal

Gannett priced an upsized $500 million of split-rated senior notes (Baa3/BB) in two tranches, a market source said.

The deal was done off the high-yield syndicate desk.

The size was initially $400 million, with each tranche increased by $50 million.

A $250 million tranche of 8.75% five-year notes priced to yield 9.125% with a spread of Treasuries plus 678 bps. They were talked in the 9.25% yield area.

The $250 million of 9.375% eight-year notes priced to yield 9.625%. Price guidance was 50 bps on top of the five-year note.

The deal was done via Rule 144A and Regulation S.

Bank of America Merrill Lynch, J.P. Morgan Securities, Barclays Capital and Citigroup Global Markets were bookrunners.

Proceeds are being used to repay borrowings under a revolving credit facility and term loan.

The media holding company is based in McLean, Va.

Ontario prices 10-years

The Province of Ontario priced $2 billion in 4% 10-year global bonds at Treasuries plus 73 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Bookrunners were Bank of America Merrill Lynch, BNP Paribas Securities, Deutsche Bank Securities and Toronto-Dominion Bank.

The issuer is based in Toronto.

L-3's new bonds seen better

When L-3 Communications' new 5.20% notes due 2014 were freed for secondary dealings, a trader saw those bonds having tightened to 182 bps bid, 178 bps offered - versus the 195 bps level at which the $1 billion of paper - upsized from $750 million originally - had priced earlier in the session.

Another trader saw a block of $5 million of the new bonds trade as tight as 180 bps.

The second trader said the L-3 gain was "pretty good," especially against the backdrop of a market largely focused on end-of-month and end-of-quarter portfolio maneuverings.

The trader said there was "pretty decent flow just because of quarter-end and month-end maneuvers," with spreads ending "largely unchanged," despite profit-taking connected with the end-of-quarter window-dressing..

"The market held up pretty well, considering."

New Entergy issue unseen in secondary

Several traders said they saw no aftermarket activity in Entergy Gulf States Louisiana's new 5.59% first mortgage bonds due 2024, $300 million of which had priced at 230 bps over.

Slight tightening in Penn Electric issue

A trader saw Pennsylvania Electric Co.'s new bonds tighten only slightly from the levels at which they had priced on Monday.

The Akron, Ohio-based utility operator's $250 million of 5.20% notes due 2020 , which had priced Monday at 195 bps over, were seen Tuesday at 194 bps bid, 191 bps offered.

Meanwhile, its $250 million of 6.15% notes due 2029, which had priced at 212.5 bps over, came in slightly Tuesday to 209 bps bid, 204 bps offered.

New Weyerhaeuser slightly tighter

A trader saw Weyerhaeuser Co.'s new 7.375% notes due 2019 at 415 bps bid, 410 bps offered, 5 bps tighter than the 420 bps over level at which the Federal Way, Wash.-based paper and pulp producer had priced the bonds on Monday.

At another desk, a trader was quoting a spread of 417 bps bid, 411 bps offered.

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