KommuneKredit sells as corporates stand down on Fed, headlines; banks firm; Nokia off lows

By Andrea Heisinger and Cristal Cody

New York, April 25 - There was little activity in the investment-grade primary market Wednesday as the Federal Reserve Federal Open Market Committee wrapped a two-day meeting.

KommuneKredit sold $1 billion of three-year paper early in the day after the triple-A-rated deal went overnight.

In the preferred stock market, BB&T Corp. announced plans for an offering of up to $200 million series D noncumulative perpetual preferreds. The deal was said to have "strong retail demand," according to one trader, but it was not performing as well as other recent preferred deals.

The Fed announced it will not change key interest rates that have been near zero. It also won't make any additional efforts to stimulate the economy, according to an announcement following the meeting.

There were additional negative headlines from countries abroad including a possible downgrade of India's credit rating by Standard & Poor's and Britain heading into a recession.

"I know we had a couple [of companies] looking, but they decided not to go," a syndicate source said late in the day. "Not the most constructive [tone]."

Some issuers could take another look at the market on Thursday but otherwise will wait until the coming week.

"This week's kind of a wash," a market source said.

Bonds traded mostly better in light activity. The Markit CDX Series 18 North American Investment Grade index firmed 2 basis points to a spread of 98 bps.

"Very light. Today felt more like a Monday or Friday as opposed to a Wednesday," a trader said. "Most stuff is a mixed bag."

Bank and financial paper tightened 5 bps to 15 bps over the day.

Morgan Stanley, Goldman Sachs Group, Inc. and Bank of America Corp. "are all 10 basis points better," a trader said.

General Electric Capital Corp.'s notes that priced Tuesday stayed 4 bps better in secondary trading.

Nokia Corp.'s bonds came about 2½ to 3 points off their lows in trading on Wednesday after Fitch Ratings downgraded the company to junk Tuesday.

Cable and telecom bonds were mixed. CenturyLink, Inc.'s 10-year notes firmed 5 bps in trading, while Time Warner Cable Inc.'s notes widened 5 bps.

Treasuries ended mixed following the Fed statement. The benchmark 10-year note yield rose 1 bp to 1.98%. The 30-year bond yield rose 2 bps to 3.15%.

KommuneKredit's three-year

Denmark's KommuneKredit sold $1 billion of 1% three-year notes (Aaa/AAA/) to yield mid-swaps plus 35 bps, or Treasuries plus 64.25 bps, a market source said.

The bookrunners were BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc.

The issuer provides funding and leasing services for municipalities in the country and is based in Copenhagen.

BB&T plans new deal

BB&T will issue at least $200 million of series D noncumulative perpetual preferreds. Price talk is 5.9% to 5.95%, according to a trader.

The trader also noted that the deal was receiving "strong retail demand," although that surprised him given that other deals - such as PNC Financial Services Group, Inc.'s recent 6.125% fixed-to-floating-rate series P noncumulative perpetual preferreds - had higher yields.

Around mid-afternoon, the trader saw the preferreds with $24.65 to $24.70 bids in the gray market.

After the market closed, a source quoted the paper at $24.72 bid, $24.78 offered, adding that it had been trading as low as $24.60, "which is really low for the gray market."

As of press time, the deal had not priced.

Bank of America Merrill Lynch, BB&T Capital Markets, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC are the joint bookrunners. Citigroup Global Markets Inc., Stifel Nicolaus & Co. Inc. and UBS Securities LLC are the lead managers.

BB&T will apply to list the new preferreds on the New York Stock Exchange under the ticker symbol "BBTPD." Settlement is expected May 1.

Each preferred has a liquidation preference of $25,000. They will be issued as $25 depositary shares each representing a 1/1,000th interest in a preferred.

Proceeds will be used for general corporate purposes. These may include potential acquisitions, stock repurchases, the repayment and/or refinancing of debt obligations, which may include the redemption of trust preferreds, and extending credit to or funding investments in BB&T subsidiaries.

BB&T is a Winston-Salem, N.C.-based financial holding company.

GE tightens

In the secondary market, General Electric Capital's 2.3% notes due 2017 continued to stay better in trading at 146 bps bid, 143 bps offered, a trader said late Wednesday.

General Electric Capital sold $2 billion of the five-year notes (A1/AA+/) at a spread of Treasuries plus 150 bps on Tuesday as part of a $3.1 billion two-tranche deal that included floating-rate notes.

The financial products and services provider is based in Norwalk, Conn.

Bank of America firms

Bank of America Corp.'s 5.7% notes due 2022 traded in 10 bps on Wednesday, a trader said.

Bank of America sold $750 million of the notes on Jan. 24 at a spread of 325 bps over Treasuries.

The financial services company is based in Charlotte, N.C.

Nokia off lows

Nokia's 5.375% notes due 2019 traded up to 86.25 bid, 87.25 offered on Wednesday, a trader said.

"Probably 2½ or 3 points off of the lows," the trader said.

Nokia sold $1 billion of the notes on April 30, 2009 at 99.075.

Nokia's 6.625% bonds due 2039 were quoted at 83.50 bid, 84.00 offered on Wednesday. Nokia sold $500 million of the long bonds in the April 2009 deal at 99.494.

On Tuesday, Fitch dropped Nokia's long-term issuer default and senior ratings to BB+ from BBB-.

Moody's downgraded the company to Baa3 from Baa2 on April 16. Standard & Poor's cut its ratings on the company in March to BBB- from BBB.

The mobile phone manufacturer and internet services provider is based in Espoo, Finland.

CenturyLink firms

CenturyLink's 5.8% notes due 2022 traded 5 bps tighter on the day to 400 bps bid, 390 bps offered, a trader said.

CenturyLink sold $1.4 billion of the notes (Baa3/BB/BBB-) at a spread of Treasuries plus 380 bps on March 5.

The broadband and telecommunications company is based in Monroe, La.

Time Warner Cable widens

Time Warner Cable's 4% notes due 2021 traded going out the door at 165 bps bid, 157 bps offered.

"That is 5 [bps] wider on the day," a trader said.

Time Warner Cable sold $1 billion of the notes (Baa2/BBB/BBB) on Sept. 7 at 210 bps over Treasuries.

The entertainment company is based in New York.

Stephanie N. Rotondo contributed to this review

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