Wachovia, Goldman Sachs price issues as activity dwindles ahead of year end; Sprint better on CEO hire

By Andrea Heisinger and Paul Deckelman

Omaha, Dec. 18 - More financials priced new deals Tuesday, with Wachovia Corp. and Goldman Sachs Group Inc. edging in before the end of the year.

Wachovia priced $2 billion, or 80 million shares, of 8% non-cumulative perpetual preferred stock at $25.

Wachovia Capital Securities LLC was bookrunner.

Goldman Sachs reopened an issue of 6.75% 30-year notes to add $2.75 billion. The notes priced at 95.094 to yield 7.149% at a spread of Treasuries plus 260 basis points.

The outstanding amount was increased from the original $2 billion.

Total size for the issue is now $5.25 billion including $2.5 billion priced on Sept. 26.

Goldman Sachs & Co. ran the books.

Ingersoll-Rand Co. announced plans to issue about $3.8 billion in incremental debt after its acquisition of Trane, Inc., following a conference call Monday.

The debt will be split evenly between short and long-term debt, with the long-term bonds of varying maturity.

They will have a weighted average interest rate of 5 to 6%.

The value of the transaction is at $10.1 billion, the company said.

The rest of the week should slow down because of the holidays, sources said.

"I would be shocked to see something new tomorrow," a market source said.

They said there likely will not be any more financials coming into the market this week, as most of them got their issues out of the way Monday or Tuesday.

"I think it's accurate to say we're not going to see any more, and probably not any opportunistic issuers," the source said.

"If I had to bet on it, I would say that's how it will be."

New deals dominate secondary

With a number of large new issues from financial players eager to get their funding needs done before the approaching year-end, focus in Tuesday's secondary market was on trading in the new paper, particularly Goldman Sachs' re-opened issue of 30-year bonds and Wachovia Bank's new perpetual preferred issue.

Credit-default swap spreads on names such as Wachovia, Bear Stearns and Washington Mutual were heard to have widened out.

Outside of the financial names, there was fairly active trading in Sprint Nextel bonds, which were seen having tightened as the big telecommunications company finally named a new chief executive officer, several months after the ouster of his predecessor.

Overall, advancing issues led decliners by a four-to-three margin, while broad market volume shot up some 37% from Monday's levels.

Goldman tightens

In the secondary market, a trader said, "the main focus" was on the re-opened Goldman 6¾% notes due 2037. The upsized tranche of those bonds priced at 260 basis points over comparable Treasuries, and got as good as 254 bps bid, 252 bps offered in initial dealings. He later saw the bonds widen a little bit from those tight levels to go home at 256 bps bid, 253 bps offered.

The trader also saw the new UBS 5 7/8% notes due 2017 "go through the roof," trading at 160 bps bid, well in from the 175 bps spread at which the bonds had priced on Monday.

Another big gainer, he said, was Citigroup's hybrid fixed-to-floating-rate notes, which priced Monday at 375 bps over, but which had narrowed to about 352 bps bid, 350 bps offered by late Tuesday.

Also on the new-issue front, another trader saw the new Wachovia perpetual preferreds, which had priced at $25 earlier in the session, trade around $25.05-$25.10 during the afternoon.

Financial CDS widen

A trader said that the cost of insuring the debt of major brokerage companies against a possible default via CDS contracts was about 3 bps wider versus Monday's levels, continuing the widening trend which had been seen in that previous session.

He saw Bear Stearns' CDS costs at 178 bps bid, 185 bps offered, Lehman Brothers at 124 bps bid, 131 bps offered, Merrill Lynch at 128 bps bid, 138 bps offered, and Morgan Stanley at 98 bps bid, 105 bps offered.

Among the major banks, he saw issues mixed, with Bank of America, JP Morgan and Citigroup all in 1 bp , the first two around 50 bps bid, 55 bps offered, and Citi at 68 bps bid, 73 bps offered. Wells Fargo and Wachovia were about 3 bps wider on the session, at 54 bps bid, 59 bps offered for Wells Fargo and 98 bps bid, 105 bps offered for Wachovia.

Among the thrifts, Washington Mutual's debt-protection cost widened by about 5 bps on the day, the trader said, to 360 bps bid, 370 bps offered.

Sprint gets a new chief, bonds seen firmer

Apart from the financials, there was considerable activity seen in SprintNextel's bonds, notably its

6.90% notes due 2019. Those bonds, which had finished Monday bid around 298 bps over, a market source said, traded around the 273 bps level for much of the session, getting as tight as 261 bps at one point before finishing at 277 bps, still well in from the prior day.

The third-largest U.S. wireless company announced that Daniel Hesse has been appointed its chief executive officer after Gary Forsee's ouster two months ago.

Hesse comes to his new post with a record of success at Sprint's local-phone spinoff unit Embarq Corp., where he helped slow profit declines, closing call centers and creating packages of services.

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