British Telecom, BofA price; Rentenbank on deck; new issues firm in secondary

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 11 - British Telecommunications plc and Bank of America Corp. both priced new issues during Tuesday's high-grade primary session, as the market was focused on Federal Reserve Chairwoman Janet Yellen's first testimony in front of Congress.

British Telecom came to market with a $1.3 billion issue of senior notes in two tranches, an informed source said.

The London-based company priced a $500 million issue of 1.25% notes due 2017 at 60 basis points over Treasuries, while $800 million of 2.35% five-year notes sold with a spread of of Treasuries plus 85 bps.

Both tranches priced tight of talk.

Meanwhile, Bank of America sold $1.75 billion of three-year senior notes in fixed- and floating-rate tranches.

There was $500 million of three-year floaters sold at par to yield Libor plus 47 bps.

A second tranche was $1.25 billion of 1.25% notes priced with a spread of Treasuries plus 60 bps.

Both tranches sold on top of guidance.

In other primary action on Tuesday, Bank Nederlandse Gemeenten sold $1.5 billion of 0.875% three-year notes at 18 bps over mid-swaps in a Rule 144A and Regulation S transaction.

Landwirtschaftliche Rentenbank joined the forward calendar on Tuesday.

The bank announced guidance for its proposed $1 billion sale of five-year notes in the area of 12 bps over mid-swaps.

The week has seen $6.55 billion of high-grade supply and may not hit expectations of a $15 billion to $20 billion week.

"It's a little surprising, but I don't think it means much," one market source said of the lack of issuance so far this week.

The source was referring to the continued positive tone the market has seen to kick off the week.

Investment-grade bond spreads tightened over the day, according to market sources.

The Markit CDX North American Investment Grade series 21 index firmed 3 bps to a spread of 65 bps.

New issues brought on Tuesday firmed in aftermarket trading, sources said.

British Telecom's two tranches of paper tightened 8 bps as the session closed, a trader said.

Bank of America's 1.25% notes due 2017 firmed 3 bps in aftermarket trading, according to a trader.

BofA two-parter

Bank of America priced a $1.75 billion issue of senior notes (Baa2/A-/A) in two tranches due 2017, according to a market source.

A $500 million tranche of three-year floaters was priced at par to yield Libor plus 47 bps.

There was a $1.25 billion tranche of 1.25% notes due 2017 priced with a spread of Treasuries plus 60 bps, or 99.912, to yield 1.28%.

Both tranches priced on top of guidance.

Bank of America's 1.25% notes due 2017 tightened in aftermarket trading to 57 bps bid, 55 bps offered, a trader said.

Bank of America is a financial services company based in Charlotte, N.C.

British Telecom prices tight

British Telecommunications priced $1.3 billion of senior notes (Baa2/BBB/BBB) in tranches due 2017 and 2019, according to an informed source and an FWP filed with the Securities and Exchange Commission.

The sale included $500 million of 1.25% three-year notes sold at 99.935 to yield 1.272%, or 60 bps over Treasuries.

There was also $800 million of 2.35% notes due 2019 priced with a spread of Treasuries plus 85 bps.

Pricing was at 99.902 to yield 2.371%.

Both tranches priced tight of talk.

British Telecom's 1.25% notes due 2017 traded better at 52 bps bid, 50 bps offered in the secondary market, according to a trader.

The 2.35% notes due 2019 tightened to 76 bps bid, 74 bps offered.

The bookrunners were Barclays, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Lloyds Securities LLC and Societe Generale.

Proceeds will be used for general corporate purposes.

British Telecommunications is a London-based internet and phone services company.

Bank Nederlandse new issue

Bank Nederlandse priced $1.5 billion of 0.875% three-year notes (Aaa/AA+/AAA) on Tuesday with a spread of 18 bps over mid-swaps, according to a market source.

Guidance for the Rule 144A and Regulation S deal was set in the mid-swaps plus "high teens" bps area.

The bookrunners were BofA Merrill Lynch, Deutsche Bank Securities Inc., RBS Securities Inc. and TD Securities.

The local government funding agency is based in the Hague.

Rentenbank sets talk

Landwirtschaftliche Rentenbank announced price guidance for its planned $1 billion offering of notes due 2019 on Tuesday in the area of 12 bps over mid-swaps, according to market sources.

The bookrunners are Citigroup Global Markets Inc., Daiwa Capital Markets Europe, Goldman Sachs International and TD Securities.

Proceeds will be used to finance the bank's lending activities, according to a 424B5 filed with the SEC.

The notes are guaranteed by the Federal Republic of Germany.

The German development agency for agribusiness is based in Frankfurt.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined, according to a market source.

Bank of America's CDS costs tightened 5 bps to 72 bps bid, 77 bps offered. Citigroup Inc.'s CDS costs firmed 4 bps to 77 bps bid, 82 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 2 bps to 64 bps bid, 67 bps offered. Wells Fargo & Co.'s CDS costs declined 3 bps to 38 bps bid, 43 bps offered.

Merrill Lynch's CDS costs tightened 5 bps to 75 bps bid, 79 bps offered. Morgan Stanley's CDS costs firmed 2 bps to 85 bps bid, 90 bps offered. Goldman Sachs Group, Inc.'s CDS fell 2 bps to 91 bps bid, 96 bps offered.

Paul Deckelman contributed to this review.

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