Eksportfinans reopens floaters; primary awaits Fed comments; Bank of America, financials firm

By Andrea Heisinger and Cristal Cody

New York, Aug. 25 - Issuance dried up in the high-grade bond market on Thursday ahead of comments on Friday from Federal Reserve Chairman Ben Bernanke.

There was a $250 million reopening of two-year floating-rate notes from Eksportfinans ASA that made up the entirety of the deals for the day. The floaters were an addition to a sale done in March.

A source said that "everyone's waiting for the Fed comments" on Friday during a symposium and that it could lay out what the beginning of the coming week will look like for the bond market.

"I think we're all hoping he doesn't say anything bad, or doesn't just say anything about the market," one source said. "It's going to [adversely affect] us if people read anything bad into his comments."

Treasury yields were back down after a rise on Wednesday contributed to the upbeat tone in the primary market. Issuers have enjoyed low rates lately, including record-low yields.

Eyes and ears will be glued to computers and TVs on Friday for word on what comments Bernanke makes on the economy and a possible stimulus from the Fed, meaning there is no issuance expected.

"I mean, maybe there will be a sovereign or something, but I think it's going to be slow for the next week," one source said, referring to the coming week leading up to the long Labor Day weekend.

The announcement that Warren Buffett's Berkshire Hathaway will invest $5 billion in Bank of America Corp. sent financial paper tighter in the secondary markets, according to traders.

Bank of America's notes are about "65 [basis points] better on the day. They traded as much as 100 better," a trader said. "Their CDS was as much as 125 better at one point; now it's only 35 better on the day."

Merrill Lynch's credit default swaps costs fell by 50 bps, a source said. The CDS costs from Morgan Stanley and Goldman Sachs firmed by 25 bps each, and J.P. Morgan tightened by 5 bps.

Paper from Citigroup, Inc. and Goldman Sachs Group Inc. traded 10 bps to 25 bps better, according to a trader.

Other sectors also were stronger in trading, including telecom bonds, which were seen generally 3 bps to 8 bps stronger, a trader said.

Rogers Communications Inc.'s bonds traded about 3 bps tighter, with the telecom sector overall stronger on Thursday.

The new bonds (A1/A+) from Illinois Tool Works, Inc. traded 10 bps to 20 bps tighter in the secondary market, a trader said.

Waste Management, Inc.'s new five-year notes also firmed more than 10 bps on the day.

The Markit CDX Series 16 North American high-grade index ended the day 1 bp weaker at a spread of 126 bps.

"There were waves of activity, especially this morning after the Bank of America news, and there was a flurry in financials, but since then, things died out in the afternoon," a trader said.

Overall trading volume climbed more than 15% to nearly $13.5 billion.

Treasuries rallied as stocks fell on a strong drop in German stocks and as investors await Bernanke's speech. The benchmark 10-year Treasury note yield fell to 2.23% from 2.3%. The 30-year bond yield dropped 5 bps to 3.6%.

Eksportfinans retaps floaters

Eksportfinans reopened an issue of floating-rate notes due 2013 to add $250 million, a market source said.

The notes (Aa1/AA) were priced at a coupon of Libor plus 20 bps with a price of 100.034 to yield Libor plus 18 bps. They were sold under Rule 144A and Regulation S.

Total issuance is $750 million, including $500 million priced on March 29 at par.

Deutsche Bank Securities Inc., Goldman Sachs & Co. and HSBC Securities (USA) Inc. were the bookrunners.

The funding agency for Norway's export industry is based in Oslo.

Bank of America comes in

Bank of America's 3.75% notes due 2016 narrowed to 385 bps bid, 365 bps offered - 70 [bps] better on the day," a trader said.

The Charlotte, N.C.-based bank's Canadian and U.S. high-grade bonds and subordinated debt widened in the previous week also.

Citigroup firms

Citigroup's 3.953% notes due 2016 traded tighter on Thursday at 260 bps bid, 250 bps offered, a trader said.

The notes were 20 bps better in trading along with other financial paper.

The financial services bank is based in New York City.

Goldman narrows

Goldman Sachs' paper also traded tighter in the secondary.

The New York-based investment bank's 3.625% notes due 2016 traded about 25 bps better on Thursday to 325 bps bid, 315 bps offered, a trader said.

Ill. Tool Works stronger

Illinois Tool Works' two tranches of bonds (A1/A+) sold in a $1 billion offering the previous day traded tighter on Thursday, a trader said.

The $350 million of 3.375% notes due 2021 traded firmer at 95 bps bid, 92 bps offered, the trader said. The notes priced at a spread of Treasuries plus 115 bps.

The second tranche of $650 million of 4.875% 30-year bonds sold at 135 bps over Treasuries. The bonds firmed 10 bps to 125 bps bid, 122 bps offered.

The global diversified manufacturer of engineered and specialty products is based in Glenview, Ill.

Waste Management tightens

Waste Management's new notes due 2016 traded tighter on Thursday. The company sold $500 million of 2.6% five-year senior notes (Baa3/BBB/BBB) at a spread of Treasuries plus 160 bps on Wednesday.

The notes firmed to 147 bps bid, 142 bps offered, a trader said.

The company handles the collection, transfer, recycling and disposal of waste and is based in Houston.

Rogers firms

Rogers Communications' bonds traded tighter in the high-grade market on Thursday as telecom paper firmed overall, a trader said.

The company's 6.8% notes due 2016 (Baa3/BBB-), which priced on July 30, 2008 at a spread of 278 bps over Treasuries, traded "3 basis points better" at 107 bps bid, 97 bps offered, a trader said.

The Toronto-based company provides wireless voice and data communications, cable television, internet and telephone services in Canada.

Paul Deckelman contributed to this review

© 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.