UPS, Kansas City Power, Barrick Gold, Peco Energy price deals; spreads tighten, Shell bond widens

By Andrea Heisinger

New York, March 19 - High-grade bond sales were smaller Thursday but no less in number as Kansas City Power & Light Co., United Parcel Service, Inc., Barrick Gold Corp. and Peco Energy Co. got deals done.

Simon Property Group announced it will issue senior notes concurrently with common stock.

Most of these new bonds did well in the secondary, tightening at least slightly.

A recent issue from Shell International Finance BV did not do so well, widening further in trading from its price Wednesday.

Spreads tightened Thursday, a day after widening significantly following a Federal Reserve announcement about pumping money into Treasuries. Treasury yields were higher, including the 30-year bond, which was up 10 basis points to yield 3.62%.

Peco Energy prices notes

Philadelphia-based Peco Energy priced $250 million of 5% five-year first mortgage bonds at Treasuries plus 340 bps.

The notes priced at the tight end of price talk, a source close to the deal said. Guidance was in the 345 bps area, with a margin of plus or minus 5 bps.

The deal "got done in short order," the source said. There weren't any difficulties as there were following Wednesday's Fed announcement when one deal from the State of Israel was postponed until Thursday and another from BHP Billiton Finance (USA) Ltd. priced about 8 bps higher than it would have earlier in the day.

"It was just unlucky enough to price after the crap hit the fan," the source said.

The electric subsidiary of Exelon Corp. is using proceeds to refinance short-term borrowings, among other uses.

Bookrunners were BNP Paribas Securities, Loop Capital Markets LLC, Morgan Stanley & Co. Inc. and Wachovia Capital Markets LLC.

UPS delivers two tranches

United Parcel Service priced $2 billion of senior notes in two tranches.

The $1 billion of 3.875% five-year notes priced to yield Treasuries plus 230 bps, while the $1 billion of 5.125% 10-year notes priced at Treasuries plus 255 bps.

Both tranches came in line with price talk, a source close to the deal said.

The package deliver company, based in Atlanta, is using proceeds for general corporate purposes.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were active bookrunners for both tranches.

Kansas City Power sells bonds

Kansas City Power & Light priced $400 million of 7.15% 10-year first mortgage bonds to yield Treasuries plus 460 bps.

The Great Plains Energy electric subsidiary, based in Kansas City, Kan., is using proceeds to repay a portion of commercial paper and for other purposes.

Banc of America Securities LLC, BNP Paribas Securities and JPMorgan were bookrunners.

Barrick Gold prices 10-year

Toronto-based Barrick Gold sold $750 million of 6.95% 10-year notes at Treasuries plus 462.5 bps.

The company engages in the acquisition, exploration and development of gold and is using the proceeds for various uses, including construction funding and investment in subsidiaries.

Citigroup, JPMorgan and Morgan Stanley ran the books.

Simon Property announces deal

Simon Property Group announced in a press release it will sell $500 million in senior notes due 2019. This will be concurrent with the sale of 15 million shares of common stock.

Goldman Sachs & Co. and JPMorgan will be bookrunners for the bond offering.

Proceeds are going to partially repay the balance of a $3.5 billion unsecured credit facility and for general corporate purposes.

The real estate company is based in Indianapolis.

Tone up slightly

The high-grade market tone was up slightly by the close Thursday, a syndicate source said, after a couple of deals fell victim to Wednesday's afternoon drop.

"We saw deals do well today but I don't think they were as well oversubscribed as they have been," he said. "There's still a lot of high-quality investor interest."

Spreads were tighter overall late Thursday as Treasury yields were up. The source said he was seeing this reflected in the day's deals and that "I'm not seeing higher spreads today."

Friday "could be quiet, but you never know," a market source said. "I'm not sure what's left to price."

UPS five year in slightly

The new 3.875% note due 2014 from United Parcel Service was seen at 225 bps offered, a trader said, which is in about 5 bps from its 230 bps over Treasuries price.

The 10-year note was not seen in trading, he said.

KC Power & Light bond tightens

The new 7.15% bond due 2019 from Kansas City Power & Light was seen tightening about 10 bps after pricing Thursday, a trader said.

The bonds priced at 460 bps over Treasuries and were offered at 450 bps over Treasuries.

Barrick Gold comes in

The new 6.95% notes due 2019 from Barrick Gold were seen firming to 448 bps bid, 446 bps offered from the 462.5 bps price, a trader said.

BHP Billiton bonds firm

The two-tranche deal from BHP Billiton Finance was seen tightening nicely from Wednesday's pricing levels. The five- and 10-year notes priced flat at Treasuries plus 400 bps.

The 5.5% notes due 2014 were at 375 bps offered, a trader said, while the 6.5% notes due 2019 were at 375 bps bid, 370 bps offered.

Shell loses ground

The new 4% bond due 2014 from Shell International Finance was seen slipping further from its Treasuries plus 201 bps price, a trader said.

The bonds were seen at 222 bps bid, 210 bps offered. They were already slightly wider after pricing Wednesday.

Pfizer takes top volume

A bond from Tuesday's issue from Pfizer Inc. was seen at the top of the most-traded list early Thursday afternoon, taking the spot from General Electric Capital Corp., which held it for several days.

Pfizer's 6.2% notes due 2019 were seen as top traded, while a GE Capital bond due 2012 was right behind.

Bank, broker CDS remain wider

Bank and broker names' credit-default swaps were seen 5 to 15 bps wider late Thursday afternoon, a trader said.

This was similar to levels from Wednesday.

Day's big movers

Hartford Financial Services, Virginia Electric & Power and R.R. Donnelley & Sons were seen as a couple of the day's big movers by late Thursday.

Hartford saw its 5.25% bond due 2011 around 40 bps tighter. Macy's Retail Holdings also made an appearance on the list of those whose bonds tightened, with its 5.9% due 2016 in nearly 40 bps.

R.R. Donnelley and Virginia Electric were not as lucky. R.R. Donnelley's 5.625% notes due 2012 were more than 75 bps wider, while Virginia Electric's 5.1% notes due 2012 were only a basis point or two behind.

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