BNP Paribas' new issue ends hectic week; more supply ahead; bank, financial paper tightens

By Aleesia Forni and Andrea Heisinger

New York, Sept. 7 - There was a lone deal on Friday from BNP Paribas SA as the investment-grade primary market took a break in light of employment numbers coming out and the huge amount of deals sold in the previous three days.

BNP priced $1.25 billion of five-year senior notes. The sale was increased from a benchmark size, which is $500 million.

According to Prospect News data, there was more than $33.5 billion of volume in the market in the past week.

There is another load of high-grade deals expected to be priced in the coming week despite the disappointing jobs numbers that came out on Friday. The number of jobs added in August was below expectations, and there was little optimism despite the unemployment figure falling to 8.1% from 8.3% in July.

Still, one syndicate source said it was "a good sign" that BNP Paribas was able to tap the market and get about $4 billion of demand from investors for its bond sale.

Corporate issuers from the euro zone have largely shied away from the U.S. bond market since the debt crisis began in Greece and other countries and there were fears of the economic weakness being contagious.

"I guess people are more confident," the syndicate source said of why people were buying up the BNP bonds.

The coming week may not see any more deals from euro zone banks - although Royal Bank of Scotland Group plc had announced it will sell senior notes at some point - but there is plenty of supply.

"We know it's going to be front loaded," a market source said late on Friday. "Should be mostly on Monday and Tuesday. No particular reason [why]."

The Markit CDX Series 18 North American Investment Grade index tightened 6 basis points to a spread of 95 bps on Friday.

Bank and financial paper "[looked] like it was tighter for the most part" on Friday, a trader said.

Merrill Lynch's 6.875% notes due 2018 were 10 bps tighter, while notes due 2014 from Citigroup Inc. were 2 bps tighter. Bank of America Corp.'s notes due 2019 were quoted 5 bps tighter.

BNP's $1.25 billion

BNP Paribas sold $1.25 billion of 2.375% five-year senior notes (A2/AA/) at a spread of Treasuries plus 178 bps, a source away from the deal said.

The bonds sold at the tight end of guidance that was initially 185 bps to 190 bps and then revised down to the 180 bps area.

The bookrunner was BNP Paribas Securities Corp.

The banking and financial services group is based in Paris.

Merrill Lynch tightens

The secondary saw Merrill Lynch's 6.875% notes due 2018 tighten 10 bps to 290 bps bid near the end of New York's session.

On April 22, 2008, the bank priced $5.5 billion of the 10-year notes at 320 bps over Treasuries.

Citi firms

In other trading, Citigroup's 6.375% notes due 2014 tightened 5 bps to 155 bps bid from Tuesday's levels.

The bank priced $2.5 billion of the five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

Bank of America too

Meanwhile, Bank of America's 7.625% notes due 2019 tightened 2 bps to 225 bps bid.

The bank priced $2.5 billion of the notes on May 8, 2009 at 410 bps over Treasuries.

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