Life Technologies plans three-tranche sale; 10-year Treasury weaker as Fed may soon adjust rates

By Andrea Heisinger and Cristal Cody

New York, Feb. 10 - There were no new deals flowing into the high-grade bond market on Wednesday as weather and market conditions continued to keep issuers away from the market.

A three-tranche sale of split-rated notes was announced by Life Technologies Corp., with pricing expected on Thursday. The sale is expected to total $1.5 billion in three-year, five-year and 10-year maturities.

Other than that, there was little life in the market as some New York City-based syndicate desks were lightly staffed due to the blizzard conditions.

"Nothing's happening today," a market source said. "I don't think anyone's even working right now."

The market tone continued to suffer, as it has for much of the week, a syndicate source said late in the afternoon.

Treasuries ease again

In the secondary market, Treasuries were the big news in trading on Wednesday on Federal Reserve Chairman Ben Bernanke's comments the Fed could adjust low interest rates "before long."

Treasuries were seen easing a second straight day on Wednesday. The yield on the 10-year Treasury note was weaker by 5 bps at 3.69%. Also, the yield on the 30-year Treasury bond closed at 4.63% from 4.58% on Tuesday.

Trading in the secondary markets also was weaker on Wednesday, sources said.

Overall Trace volume fell nearly 14% to about $12 billion, according to a market source.

Also, the CDX Series 13 North American high-grade index was unchanged on Wednesday at a mid bid-asked spread level of 102 bps, a source reported.

Meanwhile, some names continued to stay active in secondary trading, according to sources.

Kraft Foods Inc.'s outstanding debt firmed on Wednesday, while Dow Chemical Co.'s notes reversed course and widened during the day, according to sources. Elsewhere, Bank of America Corp.'s 7.625% notes continued losses for a week straight, a source said.

Life Technologies plans split-rated issue

Life Technologies is planning a $1.5 billion sale of split-rated senior unsecured notes (Ba1/BBB-/BBB-) in three tranches for Thursday, an informed source said.

The deal was announced on Wednesday in a 424B3 filing with the Securities and Exchange Commission. The notes will be divided among three, five and 10-year tranches.

Bookrunners are Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities.

Proceeds are being used to repay existing debt.

The biotechnology tools company is based in Carlsbad, Calif.

Market tone remains down

A slow week is set to continue as weather and a down tone led to another day with no new deals.

So far, only two sales have been priced, with one announced on Wednesday.

Earlier in the week fears about debt in European countries was being blamed for the lack of sales, along with low supply.

"The credit market was heavy today," a syndicate source said late on Wednesday in explanation for the day's lack of offerings. He noted that the blizzard conditions on the East Coast likely didn't help.

"It's just going to be slow this week," he said.

The coming week is expected to have more action following a long President's Day weekend.

Bank of America moves out

On Wednesday, Bank of America's 7.625% notes due 2019 continued to widen from a week ago, a source said.

The notes traded Wednesday weaker at 244 bps after moving out the day before to 225 bps from 210 bps on Monday.

The notes from the Charlotte, N.C.-based bank were quoted at 185 bps a week ago, according to the source.

Dow weaker

Elsewhere in investment-grade secondary trading, Dow Chemical's nine-year notes were weaker from the start of the month, according to a source.

Dow Chemical's 8.55% notes due 2019 widened to 237 bps on Wednesday from 206 bps on the same day a week ago.

The notes had firmed in trading on Tuesday and were seen closing at 232 bps from 235 bps on Monday, according to a source.

Dow Chemical is a Midland, Mich.-based chemical and plastics manufacturer.

Kraft tightens in secondary

Kraft's outstanding debt firmed "slightly" on Wednesday, a source said.

The 5.375% notes due 2020 were seen 1 point tighter at 155 bps over Treasuries.

In addition, Kraft's new 6.5% notes due 2040 firmed 2 bps to 180 bps on Wednesday. In trading on Monday, the notes were seen 13 bps wider at 193 bps.

Kraft priced the notes at Treasuries plus 205 bps in the previous week as one of four tranches.

The Northfield, Ill.-based food manufacturer plans to use the proceeds from the sale to fund its takeover of British confectioner Cadbury plc.

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