Northrop, Nexen offer multi-tranches, primary seen industrial-heavy, new bonds up in trading

By Andrea Heisinger

New York, July 27 - Two multi-tranche sales from Northrop Grumman Corp. and Nexen Inc. kicked off the week Monday.

Both were announced early in the day and consisted of two tranches.

An issue from Woori Bank was also priced on the emerging markets side, a source in that sector said.

The volume of new deals should pick up, at least for the next couple of days, syndicate sources said late in the day.

"We should see a few things tomorrow," a source said. "Today was pretty healthy, so it should be the same."

The day's deals from Northrop and Nexen both improved nicely once freed for trading, a trader said in late afternoon. A recently priced bond from Bank of America Corp. sat at the top of trading early in the day.

Spreads were tighter in general, and in some cases significantly so, a source said late in the day. The 30-year bond was out 9 basis points to 4.63% while the five-year note was 6 bps wider at 2.58%.

Northrop sells two-parter

Los Angeles-based defense contractor Northrop Grumman sold an upsized $850 million of senior notes in two tranches, an informed source said.

The size was increased from $750 million, he said.

The $350 million of 3.7% five-year notes priced at a spread of Treasuries plus 115 bps.

The $500 million of 5.05% 10-year notes priced at a spread of Treasuries plus 135 bps.

Bookrunners were Credit Suisse Securities, Deutsche Bank Securities and J.P. Morgan Securities. Proceeds will be used for general corporate purposes, including repayment of up to $400 million in senior notes due Oct. 15, and replacement of funding used to repay $71 million in notes due June 1.

Nexen offers long bonds

Oil and gas producer Nexen priced $1 billion of notes in two tranches, an informed source said.

The $300 million of 6.2% 10-year notes priced at Treasuries plus 250 bps.

A $700 million tranche of 7.5% 30-year notes priced at Treasuries plus 290 bps.

Bookrunners were Banc of America Merrill Lynch, BNP Paribas Securities, Deutsche Bank Securities and HSBC Securities.

Proceeds will be used for general corporate purposes including the repayment of revolver debt and the funding of a capital expenditure program. Prior to these uses, proceeds may be invested in short-term securities.

The issuer is based in Calgary, Alta.

Industrials return to tap market

After a round of earnings results, industrial names should be more prominent in the primary this week over financial names, a source said Monday.

"We already saw a couple today, but there will be more," he said. "We have a couple hanging around - not sure when they'll price."

Market conditions were "OK" at the start of Monday, the source said. "I don't know if it changed much," he said of the rest of the day.

A second source said the tone was a "little mushier" than Friday, but that it was not bad.

There are no firm deals announced for the remainder of the week.

"We'll definitely see more non-financials," the source said.

Woori sells $800 million

Woori Bank priced $800 million 7% 5.5-year bonds due 2015 at a spread of Treasuries plus 450 bps, a market source said.

Banc of America Merrill Lynch, Morgan Stanley & Co. Inc., Nomura Securities and RBS Securities acted as bookrunners for the deal.

The financial institution is based in Seoul, South Korea.

Northrop tranches improve

The five- and 10-year notes from Northrop Grumman were improved once they hit the secondary late in the day, a trader said.

The 3.7% bonds due 2014 were in about 15 bps from their 115 bps over Treasuries issue level, sitting at 100 bps offered.

The 5.05% bonds due 2019 were at 121 bps bid, 117 bps offered. This was a gain of 15 to 20 bps from the 135 bps over Treasuries pricing level.

Nexen bonds gain

The long bonds from Nexen were significantly better soon after selling late Monday, a trader said.

The 6.2% bond due 2019 was sold at Treasuries plus 250 bps, and traded at 235 bps bid, 228 bps offered, he said.

The 7.5% bond due 2039 priced at 290 bps over Treasuries, and was trading at 275 bps bid, 270 bps offered.

B of A, financials lead trading

Three financial names saw their bonds at the top of trading early Monday afternoon, a trader said.

A 6.5% bond due 2016 from Bank of America was the most popular among investors. The bond priced on July 23 at Treasuries plus 330 bps, and was tighter at 317 bps Monday.

Bonds from MetLife Inc. and Barclays Bank plc were also among the top-traded of the day.

Morgan Stanley, Merrill Lynch lead movers

Bonds from Morgan Stanley and Merrill Lynch & Co. were among the biggest movers of the day, jumping about 50 bps in either direction from a week ago, a source said.

A 5.25% bond due 2012 from Morgan Stanley was about 50 bps better than a week ago, while Merrill Lynch's 6.05% bond due 2012 was about 50 bps worse than the previous week.

Other financial names, such as Citigroup Inc. and Wells Fargo & Co. also saw their bonds swing. In the case of Wells Fargo, its 4.375% bond due 2013 was about 50 bps better.

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