Ontario prices as corporates take breather; coming week seen slower; bank, broker CDS tighten

By Aleesia Forni and Andrea Heisinger

New York, June 22 - The high-grade market spent Friday absorbing new deals following a hectic previous day, when a large amount of bond offerings hit the primary market.

"We're just watching how they're doing [in trading]," a source said late in the day.

The Province of Ontario was in the market to end the week with a $1 billion sale of 10-year notes that had gone overnight from Thursday, a source said.

There was nearly $17 billion of bonds sold for the week, according to Prospect News data, which was more than some were expecting given the uncertainty during the previous week about the elections in Greece.

A source at a syndicate desk said he saw $22 billion of corporate bonds price in the past week.

There is between $10 billion and $15 billion of supply expected for the coming week, sources said.

"We're not seeing much," a source at a smaller syndicate desk said late in the day.

"Some [companies] are going into blackout, and some that didn't go this week are just going to stand down."

The source added that Tuesday of the past week was the busiest of the year so far in terms of the number of deals in the market, according to their calculations.

"We're well ahead of last year's mid-year record," the source said.

A source from a larger syndicate desk said that its counts showed the year lagging slightly behind the same period for 2011, but this did not include sales from emerging markets names.

Recent turmoil in equities and other markets seems to have bypassed the high-grade bond market.

"The Dow was crazy yesterday - had a big drop by the end of the day," a market source said. "No one backed out because the market was down. Everything priced really tight."

The syndicate source from the larger desk said: "I think we'll be kind of busy" in the coming week.

"We could get started as early as Monday."

In the secondary market, financial paper was "generally tighter" 5 basis points to 20 bps tighter, a market source said.

The Markit CDX Series 18 North American Investment Grade index tightened 3 bps on Thursday to a spread of 118 bps.

Investment-grade bank and brokerage credit default swaps costs declined on Friday.

Bank of America's CDS costs tightened 10 bps to 263 bps bid, 268 bps offered. Citi's CDS costs also tightened 10 bps to 242 bps bid, 247 bps offered. J.P. Morgan's CDS costs declined 7 bps to 133 bps bid, 138 bps offered. Wells Fargo's CDS costs fell 2 bps to 99 bps bid, 104 bps offered.

Brokers tightened. Merrill Lynch's CDS costs were 10 bps tighter at 280 bps bid, 292 bps offered. Morgan Stanley's CDS costs declined 30 bps to 352 bid, 357 bps offered. Goldman Sachs' CDS costs also tightened 10 bps to 275 bps bid, 285 bps offered.

Ontario's $1 billion deal

The Province of Ontario priced $1 billion of 2.45% 10-year notes (Aa2/AA-/) to yield mid-swaps plus 70 bps, or Treasuries plus 84.35 bps, a market source said.

Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and TD Securities (USA) LLC ran the books.

Proceeds are being used for general provincial purposes.

The issuer is based in Toronto.

BGC preferreds free

BGC Partners Inc.'s $100 million of new 8.125% $25-par senior notes freed from the syndicate, a trader said.

Paper was quoted at $24.78 bid, $24.82 bid at midday.

The deal priced on Wednesday at the low end of talk. The deal was also upsized from $50 million.

Wells Fargo Securities LLC was bookrunner.

The company has applied to list the notes on the New York Stock Exchange under the ticker symbol "BGCA."

Proceeds will be used to repay short-term borrowings under an unsecured revolving credit facility and for general corporate purposes.

BGC is a New York-based brokerage company primarily servicing the wholesale financial and property markets.

Stephanie N. Rotondo contributed to this review

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