BofA, RBS, Willis Group sell paper as primary shrugs off headlines; Morgan Stanley shines

By Andrea Heisinger and Cristal Cody

New York, March 14 - Bank of America Corp., the Royal Bank of Scotland plc and Willis Group Holdings plc sold bonds in the primary high-grade market on Monday as it stayed active despite headlines from Japan.

Two of the deals, from RBS and Willis, were announced at the top of the day. Bank of America launched and sold its $1.5 billion of five-year notes in short order in the afternoon.

RBS also priced $1.5 billion of five-year notes.

The Willis Holdings sale was smaller at an upsized $800 million and divided into notes with maturities of 2016 and 2021. The deal was upsized slightly from $750 million.

There was a small amount of initial hesitation from issuers at the top of the day, one syndicate source said.

Those fears partially subsided once the companies saw others pricing bonds, the source said.

"I don't think [Japan's crisis] had too much impact," another source said. "We had a full calendar anyway."

There is anywhere from $12 billion to $20 billion of new paper expected for the week, sources said Friday.

About $3.8 billion of that has already priced thanks to the large bank deals.

"Tomorrow should be busier from what I'm hearing," the syndicate source said. "I think everyone was seeing what would happen [today] and go from there. The tone is OK right now."

Trading was lighter on the day and corporate bonds were wider, though some cheaper names performed well, according to sources.

Overall investment-grade Trace volume was down about 2% on Monday to $10. 6 billion, a source said.

The Markit CDX Series 15 North American investment-grade index eased 1 bp to a spread of 87 bps, according to Markit Group Ltd.

Bank of America's notes were not immediately seen in the secondary market, a trader said.

However, financials were trading up, at least the "cheaper financial names" as investors sought higher yields, the trader said.

"Everything's held in pretty well," a trader said. "A few corporates are wider by a few basis points, but some of the cheaper financial names outperformed the market well."

Morgan Stanley & Co.'s 3.45% notes due 2015 stood out.

"It was a little higher priced today than what I paid for it in the past," the trader said. "You can buy it right now at a spread of 164 to the five-year. When that issue came [on Oct. 26], it was 225 to the five-year, so it's lost about 60 basis points in the spread over Treasuries."

Treasuries rallied on Monday especially on the short end as a variety of factors - from the potential of a nuclear meltdown in Japan to Middle East unrest - weighed on bonds.

The 10-year benchmark Treasury note yield fell 4 bps to 3.36%, and the 30-year bond yield edged down 1 bp to 4.54%.

"There's definitely been a flight-to-quality bid in benchmarks," a source said. "Treasuries are up about a nickel to a dime."

Bank of America $1.5 billion

Bank of America priced $1.5 billion of 3.625% five-year notes (A2/A/A+) in a quick sale at a spread of Treasuries plus 172 bps, said a market source away from the sale.

Price talk was in the 175 bps area, and the notes sold at the tight end of that.

The bookrunner was Bank of America Merrill Lynch.

Proceeds are being used for general corporate purposes.

The bank and financial services company is based in Charlotte, N.C.

RBS taps market

The Royal Bank of Scotland priced a benchmark-sized $1.5 billion of 4.375% five-year senior notes (Aa3/A+) ahead of the close to yield 243 bps over Treasuries, a source away from the sale said.

The sale was initially announced in two parts but later consolidated to a single maturity. Pricing was at the tight end of guidance in the 245 bps area, a source said.

The bookrunner was RBS Securities Inc.

The deal is guaranteed by the Royal Bank of Scotland Group plc.

The retail banking subsidiary of RBS Group is based in Edinburgh, Scotland.

Willis Group upsizes

Willis Group Holdings sold an upsized $800 million of senior notes (Baa3/BBB-) in two parts late in the day, said a source who worked on the trade.

The deal size was increased from $750 million.

A $300 million tranche of 4.125% five-year notes priced at a spread of Treasuries plus 225 bps. The notes sold at the tight end of guidance in the 230 bps area, plus or minus 5 bps, a source said.

The second part was $500 million of 5.75% 10-year notes that sold at 250 bps over Treasuries. These notes also priced at the tight end of guidance in the 255 bps area, plus or minus 5 bps.

Barclays Capital Inc., Goldman Sachs & Co. and Morgan Stanley & Co., Inc. were bookrunners.

Proceeds are being used to redeem and/or repurchase Trinity Acquisition plc's outstanding 12.875% notes and for general corporate purposes.

The deal is guaranteed by Willis Netherlands Holdings BV, Willis Investment UK Holdings Ltd., TA I Ltd., Trinity Acquisitions plc, Willis Group Ltd. and Willis North America Inc.

The insurance brokerage and risk management provider is based in London.

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