Primary empties, coming week seen busier; Boeing, Bank of America unchanged, St. Jude gains

By Andrea Heisinger

New York, July 24 - It was a mostly empty day for the high-grade primary on Friday following a fairly busy week.

Emerging markets name Hong Kong Mortgage Corp. announced a sale of dollar-denominated bonds. Terms were also given for a deal from BB&T Corp.

New bonds from Boeing Co. were unmoved from their pricing levels, a trader said early Friday afternoon. The new St. Jude Medical, Inc. debt fared better, with the two tranches firming nicely.

Recent financial bond issues were mixed, with one from Citigroup Inc. widening, while another from Bank of America Corp. was slightly better. A sale from BB&T Corp. did the best of the three.

Spreads were generally unchanged from the previous day as Treasury yields held steady, a source said. The 10-year government note was 1 basis point weakaer at 3.65% while the five-year note was unchanged.

Hong Kong lender sells $1 billion

Hong Kong Mortgage priced $1 billion in 3.5% five-year bonds at Treasuries plus 110 bps, a market source said.

HSBC Securities and J.P. Morgan Securities were bookrunners for the deal.

The issuer is a government-controlled buyer of home loans.

BB&T gives two-year note terms

BB&T Corp. released terms Friday for a sale -its third of the week - that priced Thursday.

The financial services provider priced $250 million of 3.1% two-year medium-term notes at Treasuries plus 210 basis points, according to an FWP filing with the Securities and Exchange Commission.

The bookrunner was Barclays Capital.

BB&T is based in Winston-Salem, N.C.

Volume to pick up

The number of new deals coming into the primary is set to increase in the coming week as second-quarter earnings blackouts come to an end for industrial and financial names.

"We should definitely see more," a market source said. "I don't know how much, but more. They [earnings] are about done so it will be busier."

There has already been a slight uptick in new deals in the past week compared to the previous one that was short on issuance.

Sources at two of the larger syndicate desks said they had "a few" things on the calendar for the coming week, and "nothing too major, but we don't know when anything's coming."

Many financial names have issued during the past two weeks following earnings announcements. The coming week will likely be heavier on the industrial names, a source said.

"I don't know any specifics, but they're there," he said. "We could see some Monday."

Boeing tranches immobile

The three tranches of Thursday's deal from aerospace company Boeing didn't budge much from the pricing levels, a trader said Friday.

The 4.875% bond due 2020 was slightly wider to unchanged at 133 bps bid, 123 bps offered. It priced at 130 bps.

The 3.5% bond due 2015 priced at 110 bps over Treasuries, and was trading around that level at 110 bps bid, 100 bps offered. The 5.875% bond due 2040 performed similarly, trading at 145 bps bid, 138 bps offered after pricing at 145 bps over Treasuries.

St. Jude Medical improves

St. Jude Medical's two tranches that priced Thursday were better in trading Friday, a trader said.

The 3.75% due 2014 was in about 15 bps to 104 bps bid, 102 bps offered. They priced at 120 bps over Treasuries. The 4.875% due 2019 was narrower by about 10 bps to 122 bps bid, 110 bps offered. The bond priced at Treasuries plus 132.5 bps.

Bank of America bond stalls

The new 6.5% bond due 2016 from Bank of America stalled in trading Friday, a trader said. The bond didn't move far from its 330 bps over Treasuries spread at pricing, coming in to 327 bps bid, 323 bps offered.

Citigroup bond wider

The Citigroup bond priced earlier in the week had trouble holding its initial gains in trading, and by early Friday had more than given them back. The 8.125% bond due 2039 sold at 380 bps over Treasuries, and was at 387 bps bid, 380 bps offered as the week finished, a trader said, leaving it unchanged to worse.

BB&T bond improves

One of the few bright spots in the financial trading sector was the recent bond from BB&T Corp. The 3.85% due 2012 was improved to 205 bps bid, 195 bps offered from its price of 237.5 bps over Treasuries, a trader said early Friday.

Pfizer, Wells Fargo bonds lead trading

A long bond from Pfizer Inc. and a floating-rate note from Wells Fargo Capital XIII were among those trading heavily as of early Friday afternoon, a trader said.

Pfizer posted second-quarter earnings earlier in the week, and showed its revenues were not doing as well as expected, partly due to lower sales of brand-name drugs.

The popularity of the bond from Wells Fargo may also be because of the company's stellar second-quarter earnings announced earlier in the week, based on its purchase of Wachovia.

Citigroup bond among movers

A bond from Citigroup was among the day's biggest movers, a week after its second-quarter earnings announcement.

The 5.625% bond due 2012 was nearly 70 bps better than a week ago. Notes from other financial names such as Merrill Lynch, General Electric Capital Corp. and Bear Stearns were also much improved from the previous week.

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