Bank of NY brings lone deal; quiet primary baffles; financials mixed in trading; telecom flat

By Andrea Heisinger and Cristal Cody

New York, Feb. 13 - The week got off to a grinding start Monday with Bank of New York Mellon Corp. the only corporate issuer braving the high-grade bond market.

This slowdown came on the heels of a week absolutely packed with new deals that saw oversubscribed books almost across the board.

Bank of New York Mellon priced $1.25 billion of new three-year paper and a tranche that was a retap of 3.55% notes due 2021. Both were priced at the tight end of guidance.

Sources said they were surprised at how little activity there was in the primary.

When asked why no one but the Bank of New York tapped the market, one source said, "That's a good question and I don't have an answer."

There were headlines about Greece over the weekend, but they were positive. The country agreed on the passage of austerity measures that spawned protests.

The week is expected to have between $10 billion and $15 billion in new deals. Some syndicate sources said late last week that there could be up to $20 billion.

"Tomorrow will definitely be busier than today - not that it takes much," a source said late Monday.

Investment-grade bonds were better overall on Monday. The Markit CDX Series 17 North American high-grade index firmed 2 basis points to a spread of 97 bps.

Bank and financial paper was mixed, trading plus or minus 5 basis points, a trader said.

"Depending on the individual credit," the trader said.

Bank of New York Mellon's notes traded flat on the bid side going out.

Cable and telecom bonds traded mostly flat to 2 bps on the day.

"AT&T's unchanged," a trader said.

Trading activity stayed mostly quiet to start the week, a source said.

"Flows pretty light," the source said.

Treasuries ended the day moderately better. The benchmark 10-year note yield fell 1 bp to 1.97%. The 30-year bond yield dropped 2 bps to 3.12%.

Bank of NY's two tranches

Bank of New York Mellon sold $1.25 billion of bonds (Aa2/A+/AA-) in two parts, a market source said.

The $750 million of 1.2% three-year notes sold at a spread of Treasuries plus 85 bps. This was at the tight end of guidance in the 90 bps area.

The bank also reopened its issue of 3.55% notes due in September of 2021 to add $500 million. Those notes priced at Treasuries plus 115 bps. The tranche also was sold at the low end of guidance in the 120 bps area.

Total issuance is $1.5 billion including $1 billion priced on Sept. 16, 2011 at Treasuries plus 148 bps.

Barclays Capital Inc., BNY Mellon Capital Markets LLC and Goldman Sachs & Co. were bookrunners.

The Bank of NY was last in the market with a $1.25 billion deal in three tranches on Nov. 17, 2011. The 1.7% three-year notes from that deal sold at 135 bps over Treasuries.

In the secondary market, both new tranches traded around issuance at the end of the session, a trader said.

The notes due 2015 were quoted at 85 bps bid, 80 bps offered.

The tranche of notes due 2021 traded flat at 115 bps bid, 110 bps offered.

The financial services company is based in New York City.

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