BlackRock, Westpac Banking, USB Capital, CVS price deals; secondary loses volume, focus

By Andrea Heisinger

New York, Dec. 7 - BlackRock, Inc., Westpac Banking Corp., USB Capital XIII and CVS Pass-through Trust each priced investment-grade bond issues on what some market observers called a dull Monday.

Two of the three deals were well over the $1 billion mark but did not stir much excitement. "BlackRock was about it today," one market source said.

BlackRock's deal was the last to price, after being upsized to add a tranche of three-year notes. It totaled $2.5 billion in three tranches and priced around 5 p.m. ET.

Westpac Banking's sale was larger, at $3 billion in two tranches of notes backed by the Australian government. The AAA-rated bonds were split evenly between three-year floating-rate and fixed-rate notes.

USB Capital sold the smallest amount of the day, with $500 million in 30-year trust preferred securities.

CVS sold $744.4 million in pass-through certificates due in 2032. The sale also propelled one of the drugstore chain's outstanding bonds to the top in trading volume.

The secondary market was quiet and had a volume lower than on a similarly lackluster Friday. This may have been because the BlackRock deal priced too late to see the secondary, although the notes were a couple of basis points tighter in the gray market, a trader said.

The USB Capital securities were slightly improved once being released for trading.

Spreads reversed course and moved wider overall as Treasury yields tightened, a source said. The 10-year note was 4 basis points tighter at 3.43% and the 30-year bond was in 1 bp to yield 4.38%.

Westpac prices guaranteed notes

Australia's Westpac Banking priced $3 billion of notes in two tranches backed by the Australian government via Rule 144A.

The $1.5 billion of three-year floating-rate notes priced at par to yield three-month Libor plus 19 bps.

A $1.5 billion tranche of 1.9% three-year fixed-rate notes priced at a spread of Treasuries plus 68.7 bps.

Bank of America Merrill Lynch, J.P. Morgan Securities and Westpac Securities ran the books.

The financial services company is based in Sydney, Australia.

BlackRock sells upsized deal late

Investment management firm BlackRock priced an upsized $2.5 billion of unsecured notes in three tranches late in the day.

The deal was originally announced as being in two tranches, according to a 424B5 filing with the Securities and Exchange Commission.

The $500 million tranche of 2.25% three-year notes priced at a spread of Treasuries plus 110 bps.

The $1 billion of 3.5% five-year notes priced at a spread of 135 bps over Treasuries.

A $1 billion tranche of 5% 10-year notes priced at 160 bps over Treasuries.

Bookrunners were Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities and Bank of America Merrill Lynch.

Proceeds will be used by the New York City-based issuer to repay borrowings under a commercial paper program.

The sale was "the deal of the day," a market source away from the deal said.

"There wasn't much else to focus on," a second source said.

USB Capital sells trust preferreds

USB Capital sold $500 million of 6.625% 30-year trust preferred securities at 225 bps over Treasuries, a market source away from the sale said.

Morgan Stanley & Co., Credit Suisse Securities and U.S. Bancorp Investments ran the books.

Proceeds will be used to purchase junior subordinated debentures and will then be used for general corporate purposes.

The issuing subsidiary of financial holding company U.S. Bancorp is based in Minneapolis.

Lackluster day in primary

There was a healthy crop of new deals in the high-grade market to start the week but not much in the way of excitement, sources said.

"We were a little busy late in the day," a market source said.

The sale from BlackRock was what most people were focused on, but it did not price until late in the day.

The market "opened unchanged" and was "really, a non-event," a syndicate source said.

There are more deals expected on Tuesday and for the remainder of the week, he said.

"We have one announced for tomorrow, and have heard the same away," he said.

CVS unit sells pass-throughs

CVS Pass-through Trust priced $744.4 million of 7.507% pass-through certificates due 2032, a market source said.

The deal is guaranteed by CVS Caremark Corp.

The certificates were priced at par, the source said, adding that it was uncertain if the issue had a spread.

Barclays Capital ran the books.

The issuing entity of the drugstore chain CVS Caremark is based in Woonsocket, R.I.

USB preferreds trade tighter

The new issue of 6.625% trust preferreds due 2039 from USB Capital were improved in the secondary, a trader said late in the day.

The securities sold at 225 bps over Treasuries and were quoted at an offer of 215 bps. They were at 218 bps bid, 214 bps offered earlier in the afternoon, the trader said.

BlackRock bonds improve in gray

The three new bonds from investment management firm BlackRock were slightly better in the gray market prior to terms being posted, a trader said.

The three-year note was seen making the biggest move, at 107 bid, from the 110 bps price. The five-year notes were quoted at a bid of 133 bps and priced at 135 bps over Treasuries.

A third tranche of 10-year notes priced at 160 bps over Treasuries and was quoted as making the weakest improvement at 159 bps bid.

There will be "a lot on these tomorrow," a trader said at the end of the day, referring to trading activity for the tranches on Tuesday.

Secondary lacks focus

Whereas the previous week was mostly focused on bank and financial bonds, this week began with no clear focus on a certain sector or name.

"Bid lists have come through, but no one's really interested in anything," a trader said.

A multi-tranche sale from Xerox Corp. the previous week is still among the most actives, she said, as not much else has priced since then to detract attention.

Split-rated bonds from DirecTV Inc. were quoted at about 2 bps higher.

Telecommunications company CenturyTel Inc. saw its bonds move about 40 bps tighter in one day, the trader said.

"There must be something [happening] in that sector," the trader said.

CVS, JPMorgan among top traded

A bond from CVS Caremark was the most traded by early afternoon, a trader said. This was likely connected to the company's sale of pass-through certificates on Monday.

The company's 6.125% bond due in 2039 was trading more heavily than others in the high-grade market.

Another long bond - a 7% bond due in 2039 - from JPMorgan Chase & Co. came in after the CVS bond in terms of volume.

JPMorgan announced it will have a conference call to discuss its fourth-quarter earnings. The banking giant has also been in the news in past days over talk that it could lose up to $3 billion from derivatives trades.

Bank, broker CDS mostly tighter

Credit-default swaps for banks and brokerages were mostly tighter by the end of the day, a trader in that sector said.

The bank names were unchanged to 3 bps tighter, he said. Brokerages were quoted as between 1 bp and 4 bps improved.

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