Kansas Gas, Yamana Gold price in subdued primary; Yamana Gold notes tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, June 25 – Kansas Gas & Electric Co. and Yamana Gold Inc. brought new deals to a quiet primary market on Wednesday.

Supply slowed during the session to $750 million despite a positive tone to the market.

Both of the day’s new deals were met with solid demand, sources said.

Kansas Gas & Electric’s new issue sold around 20 basis points tighter compared to initial talk, while the new Yamana Gold deal priced around 35 bps tighter than guidance.

Yamana Gold’s orderbook was seen more than five times oversubscribed.

Wednesday’s supply brings the week’s total to nearly $8 billion, still short of earlier expectations of a $15 billion to $20 billion week.

“Should be another slow day tomorrow,” a market source said. “Looking for things to pick up again next week.”

Investment-grade bonds moved mostly tighter over the afternoon, sources said.

The Markit CDX North American Investment Grade series 22 index firmed 1 bp to a spread of 56 bps.

Yamana Gold’s 4.95% notes due 2024 tightened 15 bps to 20 bps in aftermarket trading, a trader said.

Kansas Gas & Electric’s 4.3% bonds due 2044 traded mostly unchanged from issuance, according to a trader.

Yamana Gold sells $500 million

Yamana Gold priced $500 million of 4.95% 10-year senior notes with a spread of Treasuries plus 240 bps on Wednesday, according to a market source.

Pricing was at 99.895 to yield 4.963%.

The notes (Baa3/BB+/BBB-) sold at the tight end of talk.

Yamana Gold’s 4.95% notes due 2024 tightened to 225 bps bid, 220 bps offered in the secondary market, according to a trader.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and RBC Capital Markets LLC were the joint bookrunners.

Proceeds will be used to repay the company’s term loan due June 2016, which was used to partly fund Yamana’s joint acquisition of Osisko Mining Corp.

The notes were sold via Rule 144A and Regulation S.

Yamana is a Toronto-based precious metals mining company.

Kansas Gas prices tight

In other primary action, Kansas Gas & Electric sold $250 million of 4.3% 30-year first mortgage bonds Wednesday to yield Treasuries plus 95 bps, an informed source said.

The Rule 144A and Regulation S bonds (A2/A/A-) priced at 99.747 to yield 4.315%.

Kansas Gas & Electric’s 4.3% bonds due 2044 headed out at 95 bps bid, 93 bps offered, a trader said late afternoon.

Bookrunners were Barclays, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Goldman Sachs & Co. and Wells Fargo Securities LLC.

The utility subsidiary of Westar Energy is based in Wichita, Kan.

Bank/brokerage CDS costs higher

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

Bank of America Corp.’s CDS costs eased 2 bps to 63 bps bid, 66 bps offered. Citigroup Inc.’s CDS costs rose 2 bps to 61 bps bid, 64 bps offered. JPMorgan Chase & Co.’s CDS costs were unchanged at 51 bps bid, 54 bps offered. Wells Fargo & Co.’s CDS costs widened 2 bps to 39 bps bid, 42 bps offered.

Merrill Lynch’s CDS costs eased 2 bps to 66 bps bid, 70 bps offered. Morgan Stanley’s CDS costs widened 2 bps to 63 bps bid, 66 bps offered. Goldman Sachs Group, Inc.’s CDS costs rose 2 bps to 67 bps bid, 70 bps offered.

Paul Deckelman contributed to this review.

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